With M&A activity on the rise globally, corporate real estate departments have an increasingly critical role to play in the consolidation process by preparing corporate portfolios for strategic change, according to CB Richard Ellis.
With M&A activity on the rise globally, corporate real estate departments have an increasingly critical role to play in the consolidation process by preparing corporate portfolios for strategic change, according to CB Richard Ellis.
'Companies acquiring and divesting property are under pressure to provide complete transparency for investors, so corporate real estate teams need to prepare their portfolios for merger or acquisition changes, whether acting on the offensive or defending hostile bids,' said Mike Gedye, senior director of CBRE's EMEA Global Corporate Services.
The real estate service adviser haa noted a strong rise in M&A activity particularly in recent months, as corporates seek to take advantage of an expansion window. Gedye: 'M&A activity in 2010 continues to flourish following a marked surge during July and August ahead of historic trends. Consolidation in the technology sector has been particularly prominent, but other reported deals - with RSA Insurance's bid on a large part of Aviva's business - have demonstrated that all sectors have been active over the summer months.'
Real estate functions have been driving the corporate sector's cost-savings agenda over the past two to three years, and are today seen as crucial contributor to the delivery of operational efficiencies post merger, consolidating business operations and outsourcing non-core infrastructure processes. In M&A, these skills can be the difference between the success and failure of achieving the intended gains, Gedye noted.
In particular, corporates will be seeking to increase the efficiency of their real estate portfolios by revisiting opportunities for off-shoring back-office functions to lower cost locations. 'This process was put on hold during the recent economic downturn, given the upfront capital investment required and given the difficulty in projecting the impact of the crisis on headcount requirements.' In the coming 12-18 months, Gedye expects this trend to return once again to the top of corporates' real estate agendas.
Gedye: 'We expect to see robust M&A activity throughout the remainder of 2010, particularly in the financial, manufacturing, technology and commodities sectors. The key lesson for corporate real estate executives is to ensure that they understand their portfolio dynamics. The team which demonstrates the greatest understanding of their portfolio and its alignment with the business strategy will prevail.'