This was already speculated everywhere, meaning Sito (Sitowise) will follow in the wake of the infrastructure portfolio divestment, after Kreate. Sitowise has a few other segments and different types of business, but less risky. Although projects abound. The industry is very fragmented, so with megatrends, these alone are interesting starting points. It’s a bit amusing that Kreate was intentionally pushed onto the stock market first, with a disastrous offering – and only after that was a so-called “different kind of company” offered with a larger offering to hungry investors. Everyone can draw their own conclusions from this action.
The initial figures are very good, but as mentioned, organic growth is low, albeit more defensive, but profitability is really good. Comparing with peers gives a good understanding. On the other hand, the background of acquisitions, traction, and the future are risky. Second-hand information aside, these cannot be underestimated at all.
For me, a so-called Lynchian opportunity opens up to see the results of work and organization at a practical level and everything related to the project. Let’s just say that certain competitors mentioned in this thread didn’t impress much, unlike Sitowise. Well, this is also incredibly marginal but a very interesting and somewhat amusing detail.
@Yu_Gong Will there be a recording of that event? Earlier, there was text indicating that, now just “event concluded, thank you.”
It might be that nothing will come of it, I can ask the company. The company will also have a Roadshow later, so a broader set will come live then I was actually wondering myself why a recording of that media event wasn’t released, dunno. I’ll ask tomorrow.
My own experiences with Sitowise have been quite positive. They have good designers with whom collaboration works well, especially in technically challenging projects. I wouldn’t see any exceptional risks related to the execution side in the design industry. It’s probably not unusual for any IPO that a significant motive is for owners to cash out by selling their company.
In the design industry, the most important personnel resources are not CEOs or other management figures, but rather the experienced and skilled designers, who are already in short supply. Replacing them is considerably more difficult than replacing upper management.
Indeed, after the press conference ended, the page displayed text for quite some time, saying something like this: A recording of the event will be published shortly.
My experiences have been twofold. Could it be that the company’s rapid growth has led to Sitowise having experienced project managers and designers for some projects, with whom things proceed as they should, while in others, the client has to take care of quality control?
However, I have worked more with other consulting firms than with Sitowise, so my sample size is small and not necessarily representative of the whole.
That was a good point, it largely depends on what and who lands on a certain project. In some companies, certain projects (at least housing cooperatives) seemed to be, to put it badly, “filler material.” It’s quite impossible to screen in advance what and who will be assigned to a project and estimate the end result. This varies wildly. Price also doesn’t always seem to correlate much, if anything, quite the opposite.
Quality, consistency, management, quality assurance, communication, communication. These are especially needed during the growth phase. But largely all competitors, who are also trying to grow, have these very problems. Who has them the most and how the above-mentioned are addressed, that’s a different story.
Here’s CEO Pekka Eloholma’s interview. Again, mostly a superficial overview, but hopefully it gives some idea of the company! I also asked about commitments and acquisitions.
{“content”:“These kinds of rewards are mentally very difficult for me to accept because neither the management nor the rest of the staff have been involved in the venture with the entrepreneur’s risk. Behind this is a strong public sector involvement, both as a client and as the initiator of Sito. The management, who have been with the company for a couple of years, are cashing in after a short stint. This is one of the downsides of capitalism.”}
Here are some quick picks from the company’s press release on their website:
-In the institutional offering, a preliminary maximum of 18,317,085 shares are offered
-In the public offering, a preliminary maximum of 1,000,000 shares are offered
-In the personnel offering, a preliminary maximum of 300,000 new shares are offered, and in potential oversubscription situations, a maximum of 700,000 additional new shares
-The subscription price for the IPO is 8.20 euros per offered share
-Sitowise aims to raise gross proceeds of approximately 75 million euros in the IPO by offering new shares for subscription. The company will issue 9,176,341 new shares
-The sellers offer a preliminary maximum of 7,881,994 sale shares in the share sale. The sale shares represent approximately 22.4 percent of the shares after the share issue
Anchor investors have given subscription commitments as follows:
• Funds managed and advised by Capital World Investors, 15 million US dollars;
• Didner & Gerge Fonder 12 million euros;
• Evli Fund Management Company Ltd 12 million euros;
• Ilmarinen Mutual Pension Insurance Company 14 million euros;
• Lannebo Fonder AB 15 million euros; and
• Paradigm Capital Value Fund 10 million euros.
Above there was a list of competitors in Finland, has anyone delved into the industry on a larger scale, e.g., in Europe? What companies operate in the field and what are their sizes compared to, for example, Sweco - Ramboll etc…? There have indeed been many company acquisitions, but I understand that many small companies with 1-3 people operate in the industry?
For a newly graduated engineer, the starting salary on a case-by-case basis outside the Helsinki metropolitan area is €3,500/month, depending slightly on the task. Designers inevitably have lower salaries than, for example, consultants, to whose salaries I refer. They want to keep the so-called “doers” in the company, and HR operations are, from what I’ve heard, first-class. A desired workplace among those studying the field.
After an acquisition, most companies remain as they are; the illuminated sign in front of the main door is changed to a new one, and the stamp gets the Sitowise logo. Otherwise, business operations are hardly disturbed, which is a good feature in its own way. However, Sitowise’s support services will partly strengthen operations.
Why aren’t designers considered “consultants”? The entire company started with design, and we’re talking about design consultants.
At this rate, Finland will run out of designers. Young people can’t be motivated to work in a job where the appreciation and salary are not competitive with the demanding nature of the work.
Consultants are generally referred to in the industry as construction engineers, supervisors, and project managers who are responsible for the construction process of projects. Their task is to bring a project from idea to completion, ensuring that quality criteria are met within budget, or simply to consult on various matters, e.g., by performing bridge inspections (at Sitowise, formerly Siltaexpert Oy).
Design projects are, by default, extremely competitive contracts that practically leave the company with nothing, which in turn directly reflects on the quality of the design. Supply exceeds demand, whereas consulting is based on hourly billing. With the current low standard of design, consultants can bill extra for their construction management tasks due to having to resolve designers’ tricks. The bridge inspection activities and other consulting I mentioned are, in turn, very profitable as a business, as long as there are enough projects.
There are many things wrong with what you’re writing. Sorry about that. A designer is a consultant just like a bridge inspector. Design can be done with any contract type, including hourly billing. An operating margin of over 10% is quite common in design. No company would offer design services if it were a zero-margin business.
Design is one of the most demanding stages in the construction chain and is constantly becoming more complex as work is brought to the information modeling level. It cannot be said that the general level of design is messed up. There is a screaming shortage of skilled professionals, which of course affects the quality of design. Often, projects are also rushed too much, in which case the design schedule has not been adequately estimated during the project planning phase. That, in turn, is not related to the quality of the design. The professional skill of clients (knowing what to order, what is essential and what is not) also affects the success of a design project.
Perhaps I expressed it a bit crudely. The perspective was that of a contractor working on the repair side, so it’s a bit narrow given Sitowise’s multidisciplinary business. The source data here is the traditional “trust me bro.”
However, a fixed-price contract is, to my understanding, the common form on the design side? Especially in infrastructure contracts, public projects largely require this?
How might design firms’ profitability fare if something like this is pushed through? Insurance companies will pay the compensation, but the business might take a hit.
{“content”:“I can’t quickly find information on the minimum markup amount. Or is there one? What’s the "best guess" for how much - I mean, how many - you get from, say, marking up 1000 pieces?”,“target_locale”:“en”}
I couldn’t find it either, information about it will probably come tomorrow. If that 1,000,000 is only in the public offering, then I would guess that the offering will be oversubscribed many times over.
I wonder if the growth in recent years has been achieved solely by buying small consulting firms. Has organic growth been separated in any calculations, I didn’t notice.
E: Oh, organic growth was separate there, so we’re pretty much stagnating without acquisitions.
I was actually wondering myself why a recording of that media event wasn’t released, dunno. I’ll ask tomorrow.