Strutt & Carter might work as a merged business if Strutt & Parker were to marry same-sized Carter Jonas. Strutt & Jonas – if Deliotte splits out what was Drivers Jonas? Not sure. Strutt & Cluttons? Hmm… some incompatibility issues. BNP Paribas Strutt? Not really. GVA Strutt? Never. Capita Strutt? Never, ever.
Subsumption by Savills or Knight Frank? Yes, perhaps. Subsumption by CBRE or Cushman & Wakefield? Cultural incompatibilities could end up destroying value.
Relax, this is just a name game to show that what matters most in any merger is cultural fit. The news in EG (23 January, p31) that Strutts senior partner Andy Martin is at least considering a different future for the 130-year-old firm will have worried the 800 staff, if not all the 55 equity partners.
“Andy is one of the most intelligent and well-liked senior partners around,” said the boss of one of the above firms last week. “He knows exactly what will and what won’t play with his fellow partners. He runs the business superbly. It will be interesting to see what happens.” As long as no engineers are involved…
Engineering disasters
It is hard to not feel anger on behalf of the 1,000 or more “other ranks” at GVA marched by their officers into the camp of German engineering giant Bilfinger in the early summer of 2014. On 17 May that year I wrote that “several millionaires will be created among the 72 senior directors who own much of the stock. Another 210 in the ‘marzipan layer’ will get a modest wedge of cake. All will have to stay 22 months to get their full slice.”
That deadline is approaching amid talk of expulsion. A change of guard occurred at Bilfinger in 2015 and a new boss is conducting fire sales to ameliorate losses in the oilfield division.
The GVA business, along with regiments of facilities managers, now has a for sale sign hung around its neck.
Why did GVA sell in the first place? At the time, I suggested the motivation was “Carpe per diem – seize the cheque”. The 280 partners shared about £100m after Lloyds’ venture capital arm capitalised their 27% stake. A bit harsh. The deal had corporate rationale, well articulated at the time by GVA boss Rob Bould.
GVA had, and hopefully still has, a strong consultancy business that would fit well enough into CBRE, JLL or Cushman & Wakefield.
There should now be no more pretending that engineers and agents are a cultural fit. The mini-disaster in which UK engineering consultant Atkins swallowed Lambert Smith Hampton in 1999 and spat it out in 2007 should have been warning enough. The mega-disaster that was the purchase of DTZ in 2011 by Australian engineering firm UGL was still falling apart in 2014 when GVA was sold.
The glue of similar cultures is what keeps businesses together. Another “merger” like Bilfinger and GVA – or worse, a private equity takeover by the likes of KKR – and what value is left in a business forged in 1820s Birmingham will simply dissolve.
Put ’em up
This is either a non-story or the biggest jolt to housebuilders’ complacency since the crash of 2007-08. You decide.
Last week the Financial Times told of how China’s state-owned National Building Materials Group had linked up with an Irish renewable
energy company called WeLink to build 4,000 homes in the UK by 2018.
The zero-carbon homes are to be prefabricated in factories on site. WeLink’s Irish boss Barry O’Neill told the Financial Times that his firm could “expand rapidly to fulfil the appetite for affordable housing”. Yes, but where?
I spoke to WeLink chairman Ajmal Rahman. The former co-head of capital markets at Merrill Lynch in Asia admitted the firm “needed to break through a few challenges”.
Are they talking to anyone about where to build? “There will be news in the next month or two.” Can buyers get mortgages? “We are talking to a high street bank. An announcement is due soon.” Who will build the houses? “We will install them. They can be assembled relatively quickly.” All the best.
