In Focus: A coming together
The pace of mergers and takeovers is such that we will eventually be left with one property consultancy and one legal firm - which will them merge.
I exaggerate for effect of course, but not hugely.
The most recent announcement in the property market - the £197m merger of consultancies Jones Lang LaSalle (JLL) and King Sturge - was the talk of the tongue in cheek property market awards The Brendas in Birmingham last Friday and locally the heads of the two firms are talking of a "powerful force" being created.
They may well be right. There will be a lot of good quality agents worried about their jobs at the moment, as there always are in these situations, but the reality is that there just aren’t enough commercial property deals being done at the moment to keep everyone gainfully employed. In that situation firms are always on the look out for better ways of operating and hooking up with a rival that complements what they do and can add bulk fits the bill very nicely.
Such deals can thus be partly seen as a pro-active measure - reaching for the stars in an increasingly global market - but it is also a reaction against difficult market conditions: a chance to operate more efficiently and to beef up to as protection against unwelcome predators.
JLL’s local head of office Jan Thompson said the idea of consolidation between property firms had been talked about "for some time" within the sector.
"People were talking about it in the ‘80s; they looked at the way accountancy firms were merging and accessing a much wider, global client base and saw the benefits of a wider service. I think it has just taken longer for the idea to transfer into the property market," he said.
The legal sector is a very different beast. The merger frenzy we have seen over the last 18 months can be seen as an attempt to get into the best possible shape to cope with an external threat above and beyond that posed by the economic downturn: the liberalisation of the legal marketplace.
From 6 October this year, non-lawyers will for the first time be able to invest in law firms and own them. Dubbed ‘Tesco law’ because of the impact the change will have on one man bands on the high street (who are concerned that the likes of Tesco and the AA will come in and mop up process-driven work), the fear amongst medium-sized law firms is that their biggest rivals in the future may not be other law firms but financial services companies and plcs.
Against that backdrop adding mass through merger or acquisition seems like a sensible precaution.
All of which means that we are facing some very interesting times in two of the Midlands’ most important business sectors. As Tony Blair once put it - speaking about an entirely different subject - the kaleidoscope has been shaken, the pieces are in flux and are yet to settle again.
In an uncertain period one thing is for sure: more merger announcements are on their way.
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