Avison Young’s £200m purchase of GVA last week was transformational for both sides.
For Avison Young it makes it a true player in the UK market, taking its workforce from 100 to 1,600. And GVA gets a permanent home away from the hands of its private equity owners EQT.
Now the hard work starts, integrating the businesses, working out leadership structures and determining areas for growth.
EG’s David Hatcher sat down with GVA’s chief executive Gerry Hughes and Avison Young head of UK Jason Sibthorpe, with Avison Young chairman and chief executive Mark Rose also calling in, to find out how the deal unfolded and what lies on the road ahead.
EG: How long has this deal been in the making?
Mark Rose: We have been following and looking at GVA for seven years now, over various iterations and the transactions they have gone through. We have never wavered on our view this is a first-class organisation with first class people.
We inquired at the time it was sold to Bilfinger and we carried on the dialogue EQT. We are honoured it came to a conclusion that we are all together in a partnership that was envisaged all along.
Jason, Gerry, myself and EQT we saw the future of putting together the only privately-owned, principle-led, full service real estate services firm in the world. Our goal at Avison Young is, in a private partnership, to collect great people and we’ve made that happen.
EG: How does the structure of the deal work financially?
MR: The terms of the deal are confidential but deals don’t happen unless it is a fair price for both sides. We understand the value of GVA and we paid a fair price. There will be shares associational with this for individuals at GVA and cash obviously to the existing shareholders. EQT will not be a shareholder in Avison Young’s business as a result.
Also, in terms of the future performance there will be something for everyone including the younger people who are not at the table. What folks sometimes miss with the transaction value or whatever, which is one thing, is at Avison Young we invest in young people and future partners. There are programs you just don’t see elsewhere because our rivals are public companies and can’t behave this way.
EG: Will there be any redundancies as a result of the deal?
Jason Sibthorpe: There will be no redundancies at all and we are anticipating further growth. We are not going to stop and the intent is to bring more talent into numerous areas of the business. We are excited about the transition and integration to come and identifying where we can immediately add to overall business.
Gerry Hughes: Under the stewardship of EQT we have addressed our efficiencies and productivity. We are much more efficient than we maybe were and we have a very solid platform from which to integrate with the Avison Young team and to drive forward. When it was announced to our people the excitement was palpable across our offices.
There’s complete complementarity. We are bigger business in [the UK in] many ways with 15 offices and 1,500 people but we have a lot of respect for what Mark and Jason have done in recent times. Bringing eight businesses together is very impressive and we have watched with a degree of envy the skills they have brought on board.
Our capability in retail is something that I have been wanting to address at GVA as it is not as strong as I would like it to be. I want to build up industrial further as our investment so far has paid dividends but this deal will immediately turbo charge those areas.
MR: I can’t confirm this but I know it to be 100% correct, that any of the other companies that were looking to do something with GVA would have spent more time looking at cost cutting and synergy savings rather than our approach which was that we want all the people because we believe in building a platform and investing in our folks.
EG: Who will lead the UK business once the deal completes?
MR: Avison Young is a principal-led business so I am leading it, Jason is leading it, Gerry is leading it and partners in Vancouver are leading it. It may seem a little wonky in terms of leadership but this is a partnership where we all have ownership and share profit and get together as partners.
In terms of who is going to have day-today responsibility of the [UK] business that will be discussed over the next couple of months but there is no conflict or tension.
With potential heads of groups and business leaders you would expect there to be a structure of sorts but you have to give us some time to learn and that starts from now.
EG: How do you think the two of you will work together as mangers?
JS: Gerry and I will work alongside all the other partners in the UK, and indeed across the globe, to achieve our mutual aims.
I see us working as partners like other partners do within the business. This is a genuine partnership in a platform where we give all the partners within the business the opportunity to define how the business grows. They have autonomy and accountability.
Gerry and I have different professional skills. His are in consultancy and mine are in brokerage and I’m sure we will bring to the businesses those different skills and strengths to achieve our mutual aims.
GH: We have worked together in the past and we have a great degree of mutual respect. It is genuinely good to bring people back together. There was no acrimony when Jason left to do what he did and he has done a great job at Avison Young. I am genuinely really looking forward to getting back together and building the business. It is not about stopping where we are, it is about getting back together and building for the future.
EG: How do you think the GVA business has changed since you left, Jason?
JS: I had the privilege of working for GVA for 14 years before making my best professional career decision and joining Avison Young in 2016.
It is very important to understand that within GVA, despite the significant changes in going from partnership, to PLC, to private equity, the reality is that partnership is still very much in the DNA and I’m excited to get back into the business and reignite that partnership and give everyone the platform to perform at their optimum.
EG: Were you concerned at all about buying a large UK business shortly before Brexit?
MR: The launch of Avison Young Canada Inc was on 1 October 1 2008, in the middle of one of the more aggressive declines and recessions the world has seen. There was a banking crisis and we launched in the middle of it.
We are not scared of launching great strategic ideas to build a sustainable organisation, no matter what the time is you are going to do it.
Do situations like this make it easier [to buy a UK business]? It is probably true but it was not a focus.
My view on Brexit is, firstly, it is out of our control. Secondly, we are still going to do what we do for a living, in helping owners and occupiers of real estate with decision-making and to create strategies to increase their efficiency and profitability.
The public sector clients at GVA will need even more assistance in a downturn but you can discount that – great people work through cycles. If we were looking to build up the business to sell it in two years it is possible we would have come to a different conclusion but I don’t think we would really.
What we are doing is building for the next 50 years so the cycle today is quite irrelevant. We want to build a business for our current and, most importantly, future leaders and principles that are not subject to any cycle.
GH: I think in GVA, particularly because we are a consultancy-orientated business, there are a number of features that makes us more resilient in times of trouble or a downturn. We have a regional spread, 15 across the UK that we can flex dependent upon market conditions. We are less exposed to fluctuations in transactional markets. We find that when the private sector is under a little stress the public sector fills the gap somewhat and that is where we are very strong. There are a number of features that make us more resilient in a turbulent market.
EG: What are the practical next steps?
MR: Most important will be spending time together. I’ll be back and sitting down with everyone and starting to work out next steps and key messages. We need to make sure clients understand the power of these organisations and the additional power of bringing them together.
Over the next couple of months we will be talking about normal integration and things like marketing materials, the brand and the innovation of our technology. These are all the things our clients are asking for. This acquisition is proof we are building a platform to serve them.
We have a month or two of administrative work to do to get our platform and our integration right but we need to get to business and our clients need our solutions. We need to move through quickly. As everyone has pointed out, not only do we not intend to remove or lose people but you are going to be hearing from us more as we are going to be pretty active in the UK and everywhere else, even after this closes.
There are great companies and teams out there who want to be part of a principally held private company where they are owners and get a vote and there are no options out there other than us. We have the firepower to add another $1bn of revenue. It is about growth. It is not about ways of finding efficiencies but ways of bringing more people on to this platform.
We will continue to add to our transactions business but we need to add everywhere. It is something we have always discussed in Avison Young as partners but one difference as of today that was not the case with GVA before is that we have a partnership mandate to grow. The war chest is massive and at the collective UK business, as with the collective Avison Young business, the partners originate and mandate those who they want to work with, be that individuals, teams or companies they want to acquire.
Pictured above, from left: Jason Sibthorpe, Gerry Hughes, EQT chief executive Andreas Aschenbrenner and Mark Rose
To send feedback, e-mail david.hatcher@egi.co.uk or tweet @hatcherdavid or @estatesgazette
