There is a theory in the agency world that the “marzipan layer” of mid-sized firms will eventually disappear, that you need to be either so big that you have powerful economies of scale or small and specialised to survive.
However, Strutt & Parker senior partner Andy Martin (pictured) does not subscribe to that view. His firm, which sits ninth in Estates Gazette’s Top Agents survey by revenue, is perhaps the epitome of such a “marzipan” firm. Alongside its financial success, it has also been reluctant to engage in merger or acquisition activity to ramp up its size, despite persistent market rumours to the contrary.
It has defied the naysayers this week by posting a record high turnover and profit for the year ended 30 April 2015.
It turned in a 9% increase in turnover to £111.3m, up from last year’s £102.1m and pretax profit of £27.8m, a 13% climb from 2014’s figure. Martin says these are the “best set of results the firm has ever reported”.
According to Martin, the outperformance was led by the commercial arm, where landmark deals such as the £400m acquisition of three MEPC business parks helped to boost revenue by 26%.
Growth was also seen in the consultancy and development and planning divisions, aided by government policies to unlock land for residential development.
The unexpected hike in stamp duty in December, as well as uncertainty created by the independence referendum in Scotland and the general election, had a negative impact on the firm’s residential business, however, which posted a revenue decrease of 3.2%.
But Strutt & Parker’s overall success makes it hot property and a spate of mergers last year, including JLL’s acquisition of consultancy firm Mazers and Cushman & Wakefield’s marriage with DTZ, has prompted myriad rumours about Strutt & Parker being for sale.
Dismissing speculation
Martin dismisses recent speculation about various courtships, including persistent links with CBRE and more recently about BNP Paribas Real Estate taking the commercial side and Bidwells acquiring the residential arm. So too do the supposed firms doing the courting.
“We have just started a five-year-plan and I don’t want to give it to anybody else,” says Martin.
“If you split things up, you lose the nature of the business, and everybody is fighting for clients at the moment,” he adds. “My focus is on whether we can take a customer from one part of our business into another.”
Expansion without mergers
Martin has plenty of plans to expand the business without undertaking a major merger. They include expanding its commercial business into the alternatives market, in line with investor demand.
Last year the company bought out-of-town agencies Roberts Newby, a residential business in Gerrards Cross and Chalfont St Giles, both in Buckinghamshire, and Edwards & Elliott, based in Ascot, as part of its expansion in the Home Counties.
“Are there areas we are downsizing? Not at the moment. One of the powers we’ve had over the past five years is that we have tried to focus our resources in several regional capitals and have created local centres of excellence,” he says.
“We see areas that we can grow into. There are still areas in London that we can be stronger in and we definitely see that as we pick up our commercial activities and move into these alternative sectors.”
Strutt & Parker’s affiliations with Catella, Christie’s International Real Estate and last year’s alliance with Hong Kong-based Millennium Group have also enhanced the company’s international presence, as it targets a network of clients that have interests in art and real estate. Fees are split between each company when referrals are made.
Diverse revenue streams
Martin says Strutt & Parker’s diverse revenue streams are a key to its success, offering cross-selling opportunities to its clients.
He adds: “There is a natural synergy between art and real estate. Having our brand name associated with the biggest auction house in the world is how a business like ours can punch harder globally without necessarily having some of the financial might of bigger agencies.”
Strutt & Parker might not be a global beast like those dominating Europe’s biggest cross-border deals, but it is as profitable as it ever has been, and the company says it will continue to be fiercely independent.
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■ Article originally published 15 January 2017
