Circle and Realm link to create global leader
Copyright: David Lawson - first published Property Week February 2007
Final details are being tied up of a merger with Texas-based Realm Business Solutions quietly agreed late last year. The offer came ‘out of the blue,’ says managing director Adrian Katz. He cut his professional teeth as a surveyor with firms such as Conrad Ritblat and British Land before spotting growing demand for better software and setting up Circle in 1990. Programs such as Visual Investor and Circle Developer have turned the firm into a market leader, generating revenue increases of 30% to 40% a year.
This level of success attracted the attention of Realm, a similar but bigger market leader in the US, which was flushed with resources after a management buy-out backed by New York private equity investors. For all its size, Realm is a relatively obscure brand, known mainly under the names of programs such as Argus and Dyna. Circle is a more established brand, and may be adopted as the global name.
The two firms also knew each other from Katz’s ventures into the US with Canadian partner Bruce Vanderzyde. But it was the move into wider markets like Asia on the back of a global investment surge that brought the rivals together. ‘We knew we would eventually come to blows, using up vital capital trying to develop competing products,’ says Katz. So the invitation to join forces came as a welcome surprise.
While Realm has taken over Circle, the deal is effectively a partnership, with Katz and Vanderzyde on the combined firm’s management board. Each specialises in different ways of valuing property: Realm employs the cashflow approach standard in the US while Circle concentrates on capitalisation techniques used on this side of the Atlantic.
Both approaches are spreading across the world as investors seek to appraise assets in their own ways. Eventually, users will be able to switch from one view to the other in the same program. A US banker could analyse an investment based on cash flow but then see it through the eyes of the local market. Similarly, advisors on this side of the Atlantic will be able to switch into US-mode, helping prevent misunderstandings during deals.
Circle has added another vital element to the partnership. While Realm is a leading player in the US, serving around 85% of REITs and real estate companies, it has no development appraisal arm. Circle’s expertise in this area is already being picked up among Realm’s 8,000 clients, and being promoted on Realm’s web site.
Katz is quick to reassure his bedrock of UK customers that the software will not become unfamiliar and Americanised. He also has ambitious plans to extend their services via a range of ideas that have been bouncing around in his head for some time. In future they will be able to access software centrally via a web portal rather than keeping everything on their own computers. He also sees possibilities for merging data from thousands of users across the world as a source for analysing performance and setting benchmarks - providing clients agree to sharing information.
The combined resources will enable major opportunities by pooling knowledge and expertise to deliver next generation software and service delivery through internet and portal technology, says Katz. Perhaps the most interesting ambition, however, is an online service where clients can buy and sell property via web pages. ‘RealPulse.net is already providing the web-based collaborative tool for transactions in the US and is being extended on a world-wide basis,’ he says.
Realm Business Solutions