Property crisis offers M&A opportunities

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Whilst most firms baton down the hatches to ride out the current property downturn, smart businesses will be assessing the opportunities for mergers and acquisitions, says Clearwater Corporate Finance.

The firm says the crisis in the markets offers companies the chance to acquire property businesses at realistic values or to consolidate and strengthen their position.

Phil Burns, a partner with Clearwater, says: “No-one knows precisely when the market will turn but when it does, those firms that have consolidated their positions through creative dealmaking rather than hiding their heads in the sand will be the ones who make the most from the upturn.”

Burns points to two recent events which highlight the current trends. Financial conglomerate Dawnay Day, which has stakes in a huge range of property assets including retail chain Austin Reed, pubs, restaurants and hotels, has become the latest victim of the credit crunch. It is the biggest single property-related insolvency in the UK since the beginning of the downturn and could lead to the sell-off of many of its assets.

Meanwhile two of the country’s leading estate agents have announced they are planning to merge to create a group with a revenue of around £35 million. Carter Jonas, which is based in London’s Mayfair, has 19 offices while Dreweatt Neate specialises in rural areas and has 18 offices throughout the South.

Burns adds: “The downturn offers companies the chance to pursue a growth strategy at more realistic prices than when values were at their peak. Now is also a good time to consolidate so that when things do improve, you can emerge stronger and better placed to take advantage.

“Appointing a corporate finance adviser who knows the market will allow you to assess the options and ensure that you are aware of opportunities as and when they arise.”