Spokane Valley-based general contractor Hug Services Inc., which does business as Hug Construction, has acquired Construction Associates of Spokane Inc., a Spokane-based commercial general contracting company.

Titus Hug, owner of Hug Construction, says a specialized commercial tenant improvement division and 15 full-time employees will shift to Hug Construction, positioning the company for continued growth. The July transaction brings Hug Construction's total workforce to 67 full-time employees.

Hug Construction operates from headquarters at 331 N. Fancher Road in Spokane Valley. The former Construction Associates' office, at 2834 N. Perry in Spokane, wasn't included in the acquisition.

Hug declines to disclose the price of the acquisition. He notes the deal centers around the retention of Construction Associates' workforce, active projects, and longstanding customer relationships. The acquisition includes all currently active construction projects, as well as a pipeline of future jobs for which price estimates have already been provided to clients.

"The crew is the most valuable part of the acquisition," he says. "They're a super established group. Some employees have been with Construction Associates for 20 years."

Construction Associates specializes in tenant improvements, including office remodels and renovations in commercial buildings throughout the Spokane area, Hug says.

"It adds another wing of service for us," he says.

Hug says he expects the deal will help support the company's capacity to take on future work, anticipating 20% growth in commercial office remodels and renovations next year.

Construction Associates founder Michael Galles approached Hug about a potential merger after Galles decided to retire. Galles, who operated the business for 35 years, spent the last three years looking for the right successor, because he wants his employees and clients to remain well supported, he explains. 

"I didn't want to just close the doors and leave them hanging," Galles contends. "Those guys aren't just workers; they are my friends."

The relationship between Hug and Galles began after Galles referred one of his own clients to Hug Construction for a project his company wasn't pursuing. That introduction eventually led to deeper conversations, that resulted in the acquisition, says Galles.

Galles is remaining involved through the company's transition, working alongside Hug Construction to introduce customers, mentor employees, and help preserve the processes that made Construction Associates successful, he says.

"My goal is to help them with every transition," Galles says. "I do things a little differently than most people; I'm a little bit old school in my approach, so I want there to be a smooth transition for my clients and employees."

Rather than maintain a separate brand, Construction Associates will be integrated into the Hug Construction brand. The day-to-day operations and customer service philosophy developed at Construction Associates initially will remain intact, adds Hug.

"We're trying to come in with humility and learn from what they do first," Hug says. "Our first goal is not to break it. (Galles) has a great legacy of taking care of his customers and his employees, and we're excited to live up to that and keep it going."