Countrywide PLC can this financially wounded Dinosaur be saved?
A year ago I was quoted in the Daily Telegraph about my views on the travel and direction of real estate, and specifically the then aborted LSL assault on Countrywide Plc. At present Skipton building society through its Connells agency arm is looking to purchase Countrywide plc. The question though is can the Dinosaur be saved?
So 12-months ago I told the Telegraph readers that legacy businesses are being disrupted by new models.
‘For now, the majority of property sales in the UK involve an agent. However, analyst Andrew Stanton warns: “Estate agencies of the future will be based on captured data and analytics which provide a clear narrative of what the customer likes and wants.”
He adds: “A personalised, tech-based service – with connection across digital platforms and smart phones – means there will be less need for hundreds of branches.”
‘Stanton says that Countrywide’s failure to embrace the so-called ‘proptech’ revolution has left it a “financially wounded dinosaur” and that any merger with LSL is really a hostile takeover, with LSL setting the terms.’
Well if on the 15th of February 2021, the shareholders of Countrywide wave the deal with Connells through – my question are – what is being bought and sold, where is the value, and who is getting the best deal, and will the Dinosaur transform into a 2021 forward moving agency?
Taking the first of these, what is being bought and sold, well lots of physical offices, brands of agencies, the staff and teams who run them, a large financial services and surveying arm and a large rental portfolio.
Twenty years ago, physical offices and brands would be of high value, but are offices with high rents and all the associated costs an asset these days, take Boohoo – they just bought Debenhams, but not a physical store. For sure the mortgage and associated insurance brokerage has great value, and with a combined 8% of the 1.1M completions a year the new super agency would have a big profile.
The value – well if you stop your competitor trading, it means more market for you, and if you can implement your profit-making blueprint across the network of an agency that has lost 500M in recent years, for sure plenty of profit and value here.
As to who is getting the best deal, my money is those exiting the c-suite of Countrywide as many of the ‘elite’ who steered Dinosaur Countrywide into the valley of doom and loss, have large share options which are at a respectable level, in relation to where they were six months ago.
The big imponderable is – if the deal happens can a lumbering Tyrannosaurus-Rex be a lean agile agency that is fit for the 2030’s and beyond?
Because it is not so much what agency looks like now – that the Skipton should be focusing on, it might be prudent to guess correctly how the consumer ‘doing property’ in the next few years does it.
Online purchase of all goods in the UK went up from 20% in 2019 to 31% in 2020, yes we were all locked in our hutches for much of the year, but digital, immediate amazon type shopping is now all the rage – and maybe the high street agency model has had its day?
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