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Cushman’s future is currently up in the air as its majority stake holder, the Agnelli family and its investment arm Exor put their 81% in the business up for sale. The company is expected to be worth £1.3 billion and a decision could be made on its future by the end of May 2015. There are a number of options for Cushman’s to decide between – the bids will be looked at and reviewed by the board, the owners and advisers Goldman & Sachs and Morgan Stanley.
According to Oliver Salter, a surveyor at Morgan Pryce, “there are probably 5 main options open to Cushman at the moment, each with their own advantages and disadvantages. A purchase by DTZ is the option we have all heard about but there is stiff competition from Fosun and from a sale to multiple private equity firms. Recently, there has been a large emphasis put on market share between the top 5 firms, this is likely to be a direct influence from the current market where space is very limited and the level of take up low. I believe a deal which will increase the purchasing companies market share will be the strongest contender.”
If DTZ were to join with Cushman, it would boost their US presence which has weakened since the beginning of the year but overlap in the UK is a concern. Although Cushman have expressed their concern at merging with a rival, if DTZ were to merge with another large firm it could have a negative impact on their position in the UK market.
Fosun is the largest privately owned conglomerate in Mainland China and are a hugely successful international company able to fund an aggressive expansion. Their goals focus on the long term and would bring an international edge to Cushman & Wakefield but not increase their immediate market share in the UK.
Other options are a management buyout as the management already own 19% of the company. However, this would mean taking on a huge amount of debt to do so. A facilities management merger could be on the cards meaning Cushman’s could offer a wider range of services however this may put their professional real estate reputation at risk. The final option is to sell to private equity companies providing Cushman with capital for expansion, however, as a rule they are not long term players and want quick, high returns which could damage the strength of Cushman’s business model as its likely it would need changing.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.