A Guide to Corporate Real Estate Planning

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14 March 2019

Your company is merging. Now what? Trina Marshall, of HOK Consulting's London office provides a guide to corporate real estate planning.

Mergers and acquisitions shine the spotlight on corporate real estate portfolios. If your company enters into an M&A transaction, your Corporate Real Estate (CRE) and facilities management team will need to develop a comprehensive strategy that outlines exactly what will happen to your space portfolio before, during and after the two organisations come together.

Activate a strong support team

These deals won’t work simply because the numbers add up in a spreadsheet. It’s the people who will make or break them. Employees will need to understand exactly how they fit into the new physical workplace and the blended corporate culture.

Your CRE and FM team should secure the full support of HR, legal and procurement staff who have experience navigating M&As. They will be vital change agents who can help ensure that your team addresses all the needs of the affected employees.

Find the opportunities

At the beginning of an M&A life cycle, CRE and FM teams can identify opportunities for space synergies that will benefit the consolidated company. Through careful due diligence, you can quickly establish the profile of the entire real estate portfolio - including all leased and owned space.

Organisations often have incomplete or inaccurate information about their real estate portfolios. Document the gaps you discover and fill in as many as possible.

After completing this exercise, update your property portfolio to create a revised portfolio strategy for the post-transaction organisation. To maximise its impact, map this strategy to current and future business goals.

Locations

Think about locations. For example, what are the current locations that best support the company’s goals? Which ones will be vital for expanding market share, attracting the most talented workforce or operating as cost effectively and efficiently as possible?

Analyse each piece of your portfolio against a universal set of criteria. This will clarify the decision making process and make it easier to make objective decisions about retaining or disposing of specific assets.

No assumptions

Realise that not all M&A transactions create synergies that can be leveraged in the short-term or even at all. Make no assumptions and leverage the due diligence stage of the transaction to quantify and qualify potential synergies. In the stages to come - during and after the merger process - you can prepare to transform the portfolio.

Stay focused

When a merger or acquisition is in the works, your team will do extensive front-end due diligence to assess the scope and value of the combined real estate portfolios. Yet a common mistake is to front load this initial effort and then lose focus after the transaction. It’s important for CRE and FM groups to evenly apply your time and resources throughout the process.

Engage with key stakeholders

Even if your portfolio assessment discovers possibilities for valuable real estate synergies, you will struggle to achieve them without working to identify and manage the expectations of key stakeholders. Look for opportunities to build strong relationships with these people and collect their feedback throughout each phase of the transaction.

There often are legal restrictions prohibiting official contact between the two organisations until this point. But this isn’t an excuse not to prepare a smart stakeholder engagement strategy. Waiting until after the deal closes leaves both parties in a reactive, catch-up mode.

Manage expectations

Mergers and acquisitions often suffer from a collision of mismatched 'soft' (culture for example) and 'hard' (compensation and benefits) expectations. These expectations cover a wide spectrum of individual wants and needs from new and acquired employees) and external parties such as shareholders and vendors. If you don’t effectively manage these diverse expectations, your organisation may experience reputation damage or disruptions to operations. Managing the expectations of all parties and relieving their stress will allow you to get the buy-in required for the consolidation to succeed.

Picture: HOK's Trina Marshall. HOK’s consulting group has extensive experience managing the expectations of key stakeholders and optimising the workplace environment for employees during mergers and acquisitions.

Article written by Trina Marshall | Published 14 March 2019

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