Copyright: David Lawson– appeared Property Week July 1998Home page
Readership of the property Press could be set to explode as bank managers scramble to prevent heart attacks. Rod Grant's local man almost came to grief last week when gigantic cheques began to pour in from across the Atlantic. 'I was so tied up that I forgot to tell him Hillier Parker was being taken over,' says the firm's managing partner.
Plenty of people within the industry also had palpitations when they saw the £42.5m paid by CB Richard Ellis - an average of 1.5m pounds per equity partner. And there could be more shocks to come for traditionalists. The century-old partnership of Hillier Parker May & Rowden has effectively declared that this form of structure is dead. Grant and senior partner Robert Farnes are well-qualified to judge. They are no Johnny-come-latelys, joining on the same day 26 years ago, before working to the top.
'There will be niche firms in future but few opportunities for people to work as a partner in a major organisation,' says Grant. That is why there are no regrets. Independence came a long way second to leapfrogging bigger rivals to become part of the world's biggest real estate services group.
It all started back in January with a call from Barry White, then head of Richard Ellis International, to Don Newell, then Hillier Parker's senior partner. REI was talking to CB but needed a new partner after Richard Ellis UK decided to link with CB rival Insignia.
Reactions were sceptical. Mergers and takeovers had been offered and rejected for years. Grant dismisses rumours that the firm was suffering, pointing out that fee income was rising. But times were changing.
'Clients were beginning to demand an international link,' says senior partner Robert Farnes. 'It is not enough to know who investors may be across the world. You need personal contact.'
Associations like ONCOR, which HP will now leave, were useful but could never be as good as a unified group. Hillier Parker was effectively 'in play' and CB had two big advantages.
Firstly, the partners knew and respected the firm after talks several years ago before the now-dissolved link between CB and DTZ. More important, there appeared to be no clash of culture.
Both sides are client rather than money led, says Farnes. He dismisses the idea of finding rich partners so firms can co-invest. 'I am not saying it will not happen, but in 25 years I have not been asked by a client to put money into a deal.'
Progress on negotiations - mostly done by endless trans-Atlantic conference calls - were fast. 'We only had a handful of face-to-face meetings,' says Grant.
Most staff had to be kept in the dark, even though rumours of a takeover flew around the market. Salaried partners heard a couple of months ago - under pain of secrecy. They had no veto but Farnes was confident there would be little resistance.
'People had been trooping in for some time to ask what we were going to do to match rivals and be a leading-edge concern in the next century,' says Farnes.
In fact the most sweat and tears were shed over staff salaries in negotiations. This was not through Hillier Parker fighting a rearguard, however. CB insisted on inspecting every staff member to ensure they were getting the right rewards to suite their market. This is a people business, and losing staff after the takeover could be disastrous.
But a week before the deal was signed it could have all come tumbling down. This was when Hillier Parker told its clients, trooping CB executives around 17 top funds, developers and retailers. 'If they had said no, it would have all stopped,' says Farnes.
They didn't. The main concern was for continuity of service. 'They want to be sure we will not go spinning off into great plans abroad and neglect them.'
In fact, HP was bought as a UK specialist and intends to remain so. Tie-ups like the Brooke Hillier Parker association in South-east Asia will go. Grant insists the split is amicable. The firm was told early about the deal and invited to participate but declined.
So where will CB Hillier Parker be in a year - and in five years? It may not exist - at least under this label. Such is the break with tradition that Grant is sanguine about the name Hillier Parker disappearing. That is why becoming a subsidiary of a firm with Richard Ellis in the title causes so little pain.
'In a year you will see a significant increase in corporate business and increase in our shopping centre activities in Europe,' he says. In five years the whole structure will have evolved into a seamless group. Skills will determine where operations are run from. The head of corporate advice might be in the US while shopping centres are guided from London.
Jim Didion, chairman of CB Richard Ellis, has never feared any culture gap. 'We are also a traditional firm with a history going back almost 100 years,' he says.
He already knew Hillier Parker from its joint operation with Landauer, a US competitor, in the Eighties. Once a deal with RE UK proved impossible, Hillier Parker was the only potential UK partner approached.
'We have great hopes about exporting their extraordinary talent in areas like retailing to a global network,' he says.
Perhaps the next World Cup is the best time to assess change. The takeover was sealed in a rush last week so the partners could race off to watch football on TV. Perhaps it is a good sign that the US contingent joined the cheering throng. On the other hand, the bit they caught was a penalty shoot-out.