STRATEGY


keep on turning Big wheels Andrea Kirkby investigates corporate strategy in a difficult market. T


he test of a good agent is whether they exit a downturn in the housing market in better shape than they entered. Several larger


agencies have thrown down the gauntlet; determined to grow despite the economic climate. But growth needs investment, and investment needs money, not always easy to come by in a world that still hasn’t recovered from the 2007 credit crunch. Some chains are making a success of


things, though. Belvoir has floated on London’s Alternative Investment Market, a junior division of the LSE, while Countrywide and LSL have been on the acquisition warpath, and Leaders made its first foray out of its southern heartland into East Anglia and continues to look for acquisitions to add to its portfolio. While it’s possible to grow a business


simply by reinvesting the profits from the business, getting the right funding can


46 JUNE 2012 PROPERTYdrum


speed up growth considerably. Dorian Gonsalves, CEO of Belvoir, says that the funds from the IPO will allow the firm to increase its acquisitions from four or five a year to 12-15, and its franchised new offices from 10 a year to 15. “It’s much faster,” he says, “but it’s more of the same, which is what investors want to see, not veering off in a new strategic direction.” Paul Weller, MD of Leaders, says that


With the equity funding, we bought 40 businesses; it is a dramatic acceleration.”


PAUL WELLER LEADERS


while Leaders was also focused on growth through acquisition, bringing in a new investor allowed them to step up the pace. In the early days, Leaders had bought a few businesses; between 2005 and 2010, with a fresh injection of private equity funds, it bought “getting on for 40 businesses,” Paul Weller says, “a dramatic acceleration.”


\ BIG BOYS’ GAMES It’s not just lettings agents that are expanding, either, though obviously they’re benefiting from a more friendly economic climate. Even though LSL saw pretax profits halve in 2011, it has invested in acquisitions, notably that of Marsh & Parsons late last year. Roger Leboff of City research house


Edison says the mix of major strategic and bolt-on acquisitions has enabled LSL to increase its market share from 4.5 to 4.7 per cent, and calculates that if all the


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