Into the big three

Investment & finance
At the beginning of September the merger of two well-known names in the property service sector was announced: C&W and DTZ. The new Cushman & Wakefield has now been propelled into the top three real estate services providers. We met up with the company’s Managment to discuss the reasons for the merger and how it has changed the game, both for the new company and the market

Nathan North, ‘Eurobuild CEE’: What does the merger mean for the new Cushman & Wakefield’s operations globally and in the CEE region? What advantages will it bring for both you and your clients? Will you be expanding your range of services or focusing more on particular ones?

Carlo Barel di Sant’Albano, chief executive for global capital markets: The critical aspect is that one goes into these transactions with the clients’ best needs foremost in our minds. In our case, the main point is to expand the platform and cover the whole world with our services. DTZ has traditionally been strong in the Asia/Pacific regions, while C&W is a force in the Americas. Clients are becoming ever more sophisticated and very global. So both companies have highly complementary platforms. It also strengthens the occupier services side of our operations.

Jonathan Hallett, the head of the CEE region: And the merger will raise C&W’s recurring revenue up from 35 pct to 53 pct.

C S’A: We now have revenues of USD 5 bln and a staff of 43,000 people. We’ve practically doubled the business to USD 191 bln in transaction value. We cover every market in the world. And we still have areas of potential growth.

But what changes will it involve for the merged companies? You will have two offices in many cities across the CEE and employees in the same or similar positions. Is any major overhaul planned, in terms of operations and key personnel?

C S’A: In terms of the ambitions of the senior management there has been an immediate alignment, with dialogues across each city in terms of leadership and also in terms of what we can see in bringing this talent together. But it’s all really about the clients. We want to get closer to clients’ needs and have greater capabilities to service the clients globally.

JH: The clients are changing very quickly these days. Capital is no longer local – it’s global and we have to react to the way our clients are behaving.

C S’A: We were really looking forward to day one of the merger – getting to know each other, developing the client strategy. Understanding our new client capability around the world and how to keep growing – whether through acquisitions or the expansion of the company.

JH: We have the market on our side. DTZ is very strong in terms of recurring revenue and C&W is strong in agency. The fit is fantastic in terms of the types of businesses. This combination is incredibly complementary in the CEE region.

Charles Taylor, the head for Poland: Especially in Poland, where we can now provide clients with the complete spectrum of services with deep local expertise supported by a global platform.

JH: It should be no problem to physically co-locate people employed in the Czech Republic, Slovakia or Hungary. Poland, however, is a little more challenging given the scale of the business.

C S’A: There is so much opportunity for growth. In part because the market is so strong – any overlap should be minimal.

JH: In fact, we have been pleasantly surprised by how few issues of this nature have shown up. Likewise in terms of conflicts of interests with clients, almost none are there. And again, this is due to our highly complementary client base.

CT: Clients know our relative strengths and weaknesses – and now they can go to one place and receive the best service, for both their transactional and advisory needs.

C S’A: The clients’ reactions have been incredibly positive. There are right now three players that can provide solutions to an investor or to a corporate around the world.

You have recently rebranded as part of the merger. Is it important for you to show that the company has a new emphasis and dynamism – or do you prefer simply to retain much of the former C&W’s corporate image and identity?

C S’A: We have rebranded and modernised the brand of Cushman & Wakefield. There is great respect for both brands – Cushman & Wakefield and DTZ – and now folding all this talent under the Cushman & Wakefield brand, which is iconic globally, we are very well positioned to mobilise our talent around the clients. I went through four mergers in my career. You have to rebrand so everyone really feels part of the same organisation.

Global CEO Brett White has described the merger as a game-changing event. In terms of the market for services, in what way? And is such consolidation good for the market?

CT: Locally the ranking of the players in our field has changed overnight. We have taken a dominant position on the Polish market.

C S’A: The merger is a game-changing event, clearly for the two companies in terms of the opportunity it gives us to invest in people and talent. And for the clients there are now three clear global players – and this is a dramatic difference. It was always good to be the underdog – tenaciously positioning ourselves to compete against the bigger players. This was true for both DTZ and C&W. But now we can employ this tenacity as a top-three player. So it will not be business as usual for the market. A highly unique organisation has been created. We are setting very high standards for ourselves in terms of what we expect for us and our talent, in terms of the clients and our performance.

JH: On Day One, we have announced ourselves as a global competitor. Day Two will be the start of the integration. But there is also the recognition that this is just the start, not the end. There will be further investment.

C S’A: We also expect our people to challenge each other and to challenge the management to set very high standards. We will look for opportunities to strengthen in certain areas.

The making of the merger

DTZ was established as a brand in 1993, when London stock exchange listed Debenham, Tewson & Chinnocks formed a joint venture with Jean Thouard of France and Germany’s Zadelhoff group, but the origins of the company include the founding of Debenham and Tewson in 1853 and go as far back as the establishment of Chesshire Gibson in Birmingham (UK) in 1784. It was acquired by Australian engineering conglomerate UGL in 2011, before being sold last year to a private equity consortium led by TPG Capital and including PAG Asia Capital and Ontario Teachers’ Pension Plan. Cushman & Wakefield also has a long heritage. It was founded in 1917 in New York, but its European operations can be traced back to 1820 with the establishment of Healey & Baker in London. In 2007 the company was taken over by Exor (formerly IFIL), an investment company controlled by the Italian Agnelli family. In May this year, DTZ’s new owners concluded the deal to buy C&W for USD 2 bln. Brett White, the former chief executive of CBRE, has been appointed C&W’s new chairman and CEO. The new company has 43,000 employees and offices in 60 countries. It has also 400 mln sqm under management in its portfolio. Annual revenues amount to USD 5 bln.