Two’s company. And three’s an even bigger one
Whilst the estate agency industry has been distracted by the slow-motion demise of Countrywide and its related antics over the past few weeks together with the excitement of the rise of Boomin, I think something else has been going on under our noses – the proposed merging of the three biggest estate agency groups in the UK.
Now you’ve read that line again to make sure I said what you think I said, yes, I wager that the much-publicised acquisition of Countrywide by Connells will go ahead but, to coin an old phrase, there’s actually going to be three people in that relationship. The additional participant in the property industry’s largest ever menage-a-trois is, I predict, none other than LSL.
This new ‘Super Power’ combines the best of all three businesses:
- The best management team in the industry – Connells top team would run the lot
- Connells have declared their intention to expand this week
- A resulting branch reach that would allow the combined entity to dominate nationally as no other agency has ever done
- Mass brand consolidation into a handful of names. A big name on every high street rather than the current, fragmented picture
- Three big budgets promoting fewer brands – a Marketing Director’s dream
- Huge leverage with premises landlords – the rents on 1500 or so offices would suddenly be forced much cheaper, Mike Ashley style
- FS, conveyancing and survey dominance via LSL across the group
- Lettings and management strength across the network, perhaps the one thing that Countrywide do very well
- The choice of whether to be publicly listed as LSL and Countrywide are. Or to be a private company as Connells are, well away from scrutiny
- Massive back-office economy of scale – HR, business services, head office, marketing etc
- The City will love this deal. Watch the share price of Countrywide and LSL rise if my reckoning is confirmed
If this scenario scares you as a competitor, then I’m afraid it becomes the absolute right thing for Connells Countrywide LSL (let’s call it CCL) to do. Doesn’t it?
The proof will be if LSL are forced to confirm or deny that conversations are taking place. As a public company they would have to then declare their position to the Stock Exchange.
As for those that wonder whether the Competition and Markets Authority may scupper such a liaison, well, the combined might of CCL would still only represent about a 15% market share of UK property sales – well under the 40% threshold that would trigger concerns of them having a dominant market position.
Ridiculous? I don’t think so and I say it’s more likely to happen than not and I hear whispers of certain pieces being moved around the chess board in readiness already.
Please forgive the cliché – but watch this space.
Josh Rayner is the CEO at Rayner Personnel.