Mergers and acquisitions in estate agency – the unintended consequence?
In recent weeks we’ve seen a flurry of takeover deals, arguably the likes of which we haven’t witnessed since the late 1980’s when the Prudential, Halifax and the like were hoovering up estate agency chains like freeloading relatives at a wedding buffet.
Countrywide has become Connells. Douglas & Gordon reverse into Foxtons, as Hunters are absorbed by TPFG, Gibbs Gillespie are taken in by Leaders Romans and Dexters buys Roy Brooks. This is all in less than three months of the year beginning and rumour has it that there are more takeover surprises to come in 2021 still, especially now that Dexters have ‘kids in a candy store’ money.
At this rate, one wonders whether in the next few years most estate agency transactions by way of market share will be ‘owned’ by just five or so big groups? After all, that’s how most sectors end up as Procter and Gamble, Unilever, Kraft, Comcast, Mars, Kellogs, Facebook, Ford, Nat West, Rupert Murdoch’s News Corp, Sports Direct and so on, ultimately control vast swathes of a commercial genre. Some might call this monopolistic as in essence a handful of companies headed by a few executive teams and a smattering of powerful shareholders will dictate policy, direction of innovation, fee-pricing and even ethics in each category.
I do though applaud the current M&A activity in our sector. It demonstrates an industry that is on the up, one in which investors are clearly confident. Private equity types are smart and we should feel significantly buoyed that if the plush PE shops of Mayfair are shouting ‘buy’ then it follows that we can feel confident that estate agency is in for a decent time of it in the following months and years – because the clever money says so.
But there’s a but…
As the property industry consolidates, placing more power in the hands of fewer people, how does that play-out for agents themselves? Whilst I welcome the new-found vote of confidence in our trade, I worry about what this means for those that actually do the business – those that convert it, drive it, oversee and transact the million or so sales and three million or more lettings deals each year – those that are the very foundation of our existence.
My caution is that estate agency is quite a transient business with agents moving around relatively frequently – yet if most market share becomes owned by a small band of corporate executives it surely won’t be so easy for staff to jump from one firm to another for better money or greater prospects when they are mainly owned and operated by the same people?
Salaries might start to look rather standard everywhere. Company cars the same wherever you look. Working conditions rigid and imposed as a one-size-fits all. Accordingly, earnings competitiveness may erode and job choice may reduce for those working in what could easily become corporate estate agency prevailing as far as the eye can see.
And will, in effect, the sometimes-bland corporate culture of one large entity then be imposed on many others then too so that individual character within a business becomes a mere memory? Unfortunately, I can think of a few London estate agencies where the ‘fun’ has gradually been removed from ‘function’.
You may disagree with me, but my resolute belief is that the value in the estate agency industry is within its people – not the brand above the door nor it’s branch network nor its balance sheet.
The value is owned by the listers, the negs and the branch managers themselves rather than a head office. Individuality rules as does the power to work flexibly and to earn what you are worth – unrestricted from red tape and bureaucracy.
I’d be interested to hear from agents what they think? Is market consolidation a good thing long term for you personally or does it mean that you will all potentially be doing more for less in the future? Are we indeed heading for a ‘Sports Direct’ approach to running estate agency businesses or will its people, particularly the best of you, resist being commoditised and step up to plough your own furrow?
I believe that the future of our industry is in the hands of the many, not the few. Don’t you?