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My recipe for a marriage made in heaven

Increased industry consolidation was always on the cards this year. But the merger of Deloitte and Drivers Jonas in January was a surprise...

The multidisciplinary merger is making waves in accountancy and agency circles, and is even causing ripples in the legal profession. Under the Legal Services Act, lawyers could face competition from multidisciplinary practices such as accountants, surveyors and others from 2011.

Accountancy heavyweights have long aspired to the “one-stop shop”. Post-Enron, their rebuilding of management consultancy businesses has brought them into direct competition with the big property services firms. It is hard enough to successfully merge same-sector businesses, let alone those from different disciplines, as evidenced by some of the fallout following the flurry of mergers in the pre-recession years.

Driving change in professional firms, which is characterised by high levels of expertise and little hierarchy, has particular pitfalls. Providing a bespoke service for clients sets them apart. In personalising the service, individuals develop relationships with their clients. Power and knowledge then reside with the individual — a business asset who can walk out of the door.

Professionals can be prima donnas. Fear of change and losing status causes hostility, as people dig in to protect their turf. Good leadership is a priority. Leaders need a vision that is clear to staff and clients, and the ability to motivate others to achieve it. Without a clear goal, the forces in favour of a status quo can be overwhelming. If senior people don’t see eye to eye on values, culture and vision, the alliance is doomed.

A compelling reason for mergers is to unlock added value. When different disciplines combine, they gain a more varied and extensive client base and, as in the case of Drivers Jonas, greater global reach. A merger should invigorate, bring in new blood and provide a wake-up call for complacency.

One of the positives of a multidisciplinary merger — it is called a “merger”, even when it is a takeover, to de-emphasise any perceived imbalance of power — is the opportunity to introduce diversity into the mix. Despite diversity policies, the property industry is still predominantly male, middle-class and white.

Typically, merger parties focus on financial and operational aspects, and not integration. But neglecting people issues can be fatal, particularly in professional services firms, where people are the key assets. Opportunities to cross-sell to each others’ clients can be eroded by any delay in integration. The speed of the process may be dictated by accommodation, but key value-creating resources need to be ringfenced.

To err is human

However strong the business case for a merger, it can be undermined by ignoring the need to motivate human resources. Studies have shown that only half of mergers between professional services firms are successful and “people issues” are the reason for failure in 90% of cases.

Alan Froggatt, who, as CEO of CB Richard Ellis steered the firm through several mergers, says: “People focus on the numbers and organisation and forget about the people.”

The best indicator of success is “seeing people from the same department but opposing teams going off together to see clients. Then you know you’ve got there”.

In fact CBRE has a “secret weapon”: Reg Coomber, who organises the sports days and quiz evenings that put people together in a relaxed setting. That does more than anything else to break down the barriers to post-merger integration.

Click here to read the full Property Week article.