C&W Owner Seeks Private Buyer with Deep Pockets

Look for another shakeup in the commercial real estate world with reports that Cushman & Wakefield is up for sale.
Jahn Brodwin, FTI

Jahn Brodwin, FTI RE Solutions

Look for another shakeup in the commercial real estate world with reports that Cushman & Wakefield, the largest privately-held property services firm, is up for sale with a potential price tag of $2 billion.

The Wall Street Journal reported that the Agnelli family and its investment arm, Exor SpA, is hiring Goldman Sachs Group Inc. and Morgan Stanley to help seek a buyer. The family, owns 81 percent of the New York-based firm while employees own the remainder.

Cushman & Wakefield is the world’s third largest real estate company behind CBRE Group Inc., based in Los Angeles, and JLL, which is headquartered in Chicago. Both The New York Times and Bloomberg reported that the Agnelli family, controlling owners of Fiat Chrysler Automobiles based in Europe, does not want to sell Cushman & Wakefield to one of its rivals and would prefer a private buyer such as a private equity firm or sovereign wealth fund.

Meanwhile, Cushman & Wakefield and Exor, were neither confirming nor denying the reports.

“As is the normal course of business, both Cushman & Wakefield and EXOR continually seek ways to further enhance the businesses, create value and further accelerate their plans. There is currently no transaction to disclose, nor guarantees that such a review may result in any transaction involving Cushman & Wakefield,” a Cushman & Wakefield spokesperson told Commercial Property Executive.

But coming off the best year in its 98-year history and at a time when commercial real estate prices and values are on the rise again, it could be a good time to shop the company around.

“We have just achieved a record-breaking financial performance from a revenue and EBITDA perspective, which solidifies our position as a top-tier global real estate services firm,” the Cushman & Wakefield spokesman added. “We have an ambitious strategic plan, which we are emboldened to further accelerate. And we’ve had a great long-term relationship with EXOR, who have fully endorsed the strategic plan and direction of the firm, and has been a very supportive partner since 2007.”

Jahn Brodwin, senior managing director of FTI Real Estate Solutions, said there could be several thoughts motivating the Agnelli family.

“Perhaps they simply have seen the values rise and feel it has sufficiently matured and it is time to cash in the chips and move on,” Brodwin said.

He also noted they may think the values are overheated and want to get out before the market corrects. Or, he added, they may have “simply put a clock on the investment and time has run out.”

As to why they would not want to sell to a competitor, Brodwin said it could be because “approximately 20 percent of the firm is owned by management and current management does not want to be ‘retired.’ Another reason might be that current management did not want its main competitors to see what’s under the sheets in case the deal did not go through and it could put C&W at a competitive disadvantage if it did not end up transacting.”

Brodwin said Exor should not have a problem finding interested bidders.

“There are a number of private equity shops that are likely buyers for C&W who have been buying other real estate brokerages and related service companies in the hopes of building up a real estate powerhouse to possibly take public,” he told CPE.

Cushman & Wakefield recently closed on the acquisition of Massey Knakel Realty Services, a New York boutique brokerage, for a reported $100 million. The deal, which closed in December, capped a year in which DTZ was acquired by a private equity consortium led by TPG Capital, PAG Asia Capital and the Ontario Teachers’ Pension Plan and soon merged with Cassidy Turley. Earlier in 2014, London-based Savills acquired U.S. tenant representation firm Studley. This year started off with Toronto-based FirstService Corp. announcing it was spinning off Colliers International to create two separate publicly-traded companies. FirstService is a leader in residential property management and services while Colliers is a top global CRE services firm.