easyProperty and Guild deal ‘driven by desperation’ and ‘unlikely to succeed’, claim

The ‘merger’ between easyProperty and the Guild of Property Professionals and its sister brand Fine & Country has been described as either “an unholy alliance or a godsend”.

The deal, touted as being worth £60m, is set to finalise next month and has now been scrutinised by proptech experts Eddie Holmes and James Dearsley.

The pair claim the deal “could eventually be seen as one of the worst knee-jerk responses by a traditional firm to the threat of digital transformation”.

Looking at easyProperty, when it launched it promised “big things”, say the pair.

It promised a profit in the year to last September of £2.9m based on a turnover of almost £24m. However, it recently announced a loss of £11.3m on a turnover of £875,000 in that period.

The company had expected to be listing 4,000 to 5,000 properties each month by 2016: “Two years later, the reality is around 80 properties per month.”

Then there was the ‘funeral’ parade stunt in London, marking the ‘death’ of high street agents.

But what of the deal itself?

Holmes and Dearsley allege: “We have it on good authority that the deal rests on the release of approximately £15m cash by Tosca Fund (one of the main backers of easyProperty).

“Of this, we are told that the vast majority has been used to buy out Guild shareholders, leaving a smaller proportion available for operational or marketing costs associated with easyProperty

“This begs the question – why is the transaction being described as a merger if it is in effect a purchase of the Guild by easyProperty’s main funders?

“The organisation structure put forward by the Guild certainly shows this to be the case.”

The pair also say that when Tosca invested, easyProperty was valued at £78m: “Therefore this deal has slashed 70% from its ‘value’. Astonishing.”

Holmes and Dearsley say that for Rob Ellice, founder of easyProperty, the deal is a salvage operation; for Tosca, they claim it is a “Hail Mary” salvation attempt to rescue some of their initial investment.

And for the Guild, they say it is seen as a defensive move against the rise of online agents, as opposed to the option of standing back and doing nothing.

Holmes and Dearsley describe the rationale for the deal as “driven by desperation”.

Describing the disparity in brand values, they say that easyProperty’s are about value, volume and taking on the big boys.

Fine & Country – currently promoting polo events – is about prestige, money and lifestyle.

Holmes and Dearsley say it is “unfathomable” how the difference can be turned into a workable strategy for Fine & Country agents.

The pair conclude: “All things considered, we therefore doubt that this transaction is likely to deliver either outcomes of a successful digital transformation for the Guild or help easyProperty find a sustainable business model.

“One rider, however. The project is under the stewardship of a well respected and experienced agent, Jon Cooke. It will take someone of exceptional ability to pull this project off.”

This is a fascinating analysis, with more here:

http://proptechconsult.com/2017/06/22/easyproperty-the-guild/

x

Email the story to a friend



28 Comments

  1. AgencyInsider

    easy valued at £78m? Pah! Only ever in the eyes of the deluded fools who thought it could ever succeed. There never was that value there to slash.

    For Tosca this will be throwing good money after bad. The only winners will be the Guild/F&C former owners who are laughing all the way to the bank. Good luck to them.

    Jon Cooke is a great guy but he will need a lot more than few Hail Marys to make a go of this mishmash of incompatiblity.

    Report
  2. Simon Bradbury

    Whilst the full article raises some interesting questions, I believe that the main contention is erroneous.

    As I alluded to earlier this morning (in a separate post on a different site), it’s my view that the analogy of “…a Guild agent walking through the door with a Fine & Country hat on and switching it midway through the appraisal for an EasyProperty hat?” is simply inaccurate and represents a misunderstanding of the main proposition.This approach has never ever been suggested in any of the communications from The Guild or at any of the very well attended “roadshows” . As far as I am aware (and I have attended one of the meetings and received additional communication detailing the proposition ) Guild and Fine & Country members are simply being given an opportunity to operate a well known and totally separate brand as is common in modern business and indeed in estate agency. 

    I personally remain open-minded as to whether the concept would work in our area where the so-called “onliners” still have a pitiful market share of about 5% in total. However, I may be more persuaded if I operated in a location where their market share was significantly greater and the general public had already demonstrated that they believe ( rightly or wrongly) in the “budget/up-front payment” model.

    The question then would be…” Do I want to be able to offer this model as an option and if so does the easyProperty proposition represent the best opportunity for my business and , crucially, my customers?”

     

    Report
    1. RealAgent

      With respect Simon I think you missing the bigger point here which is there is absolutely NO synergie for either Guild or F&C members.
      This is purely the backers of easy buying into something to stop their real estate investment bombing by trying to kid their own shareholders that the money spent on technology wasnt wasted and on the otherside the main shareholders of the Guild and F&C not looking at this as anything other than a statement of “yep you bet I will sell”
      There is no technology that this merger brings to the members, so really all one can say is congrats to the Linley’s and Jon Cooke for the windfall.
       
       
       
       

      Report
      1. Simon Bradbury

        With respect RealAgent…
                                                 I’m sure that there were, and still are, a variety of motivational factors behind this sale/merger. I would certainly expect (and even hope) that one of those reasons would be the short and long term financial gain for all concerned – including for the individuals you have named. 
        In my view, The Guild and Fine & Country have a long track record in supporting members and presenting them with a whole range of opportunities for mutual financial benefit. Some of these opportunities have been very successful, some have failed – but I believe they have always had the interests of their members at heart. Ultimately their “members” are also their customers of course they will need to account for this – in the same way as I’m sure you do within your own business. 
        This is simply another example of that approach and it is for those members/customers themselves to decide whether or not it suits their individual needs in their own area at this point in time.
        My previous comments are, of course, simply opinions. However, to contend ( as you do) that “There is no technology that this merger brings to the members…” is simply not true. The fact is that a considerable amount of technology and I.T. know how is being made available to Guild and Fine & Country members should they choose to go ahead with this offering.
         
        I will reach my conclusions based on facts – not simply opinion.

        Report
        1. RealAgent

          I hear your sentiments and applaud your flag waving, but the reality is any organisation like the Guild or F&C dont do anything for the members, they do things that they hope justifies their continued payments by members. In essense there is nothing wrong with that, that is what support businesses do, but if I am reading the context of your words correctly, to imply one of the reasons for this deal is because it benefits the members strikes me as desperately niaive. 
          The only way I see this being of any use to members is if the easy brand is ditched, in which case the viewing system for MIGHT be of some use to some agents, but only I suspect if they dont already run an existing software in their offices.
          Anyway this is PURELY my opinion but as a holder of one of those licences, my view is the association with a cheap brand does me no favours however you are clearly better informed by the group than I am because I have had NO communication whatsoever regarding this deal to convince me otherwise. 
           
           
           

          Report
          1. AgentV

            so would agents spend £350 per month to drive lots of new business to them via Collective Active Intelligent Marketing?
            PeeBee can you please check out the acronym?

            😉

            Report
  3. PeeBee

    “I personally remain open-minded as to whether the concept would work in our area where the so-called “onliners” still have a pitiful market share of about 5% in total.”

    AKA the average across the UK…

    “The question then would be…” Do I want to be able to offer this model as an option and if so does the easyProperty proposition represent the best opportunity for my business…”

    Come that point, I would be particularly interested in the answer to “How’s it going – offering to sell homes and pay for the privilege, Mr Bradbury?”

    I sincerely hope I never have to ask it…

    Report
    1. Simon Bradbury

      I love you PeeBee – please don’t ever change!

      Report
      1. PeeBee

        Can’t change… won’t change, Mr Bradbury!

        It has probably cost me ‘friends’ over the years; it has definitely lost me money – but I have learned to live with that.

        Keeps me real. 

        Or unreal – dependant on viewpoint…

        Report
  4. Shaun77

    Surely, property professionals know that there is a particular approach and strategy required to a) ensure you maximise a property’s value and b) ensure the sale is safely and skilfully guided to completion.
    As such, I simply don’t understand why any agent, and especially a so called “Guild for Professionals” would wish to entertain and endorse an alternative proposition that is simply incapable of achieving the best outcome for its clients.
    The whole “do it your self” or “we do it for you” proposition is crazy. Can you imagine a plastic surgeon saying he’ll heavily discount his cost provided you’re happy to do the operation yourself using his resources. You may not end up with exactly the nose you wanted but think about the money you’ll save.

    Report
  5. AgentV

    The part of all this that I don’t understand is that what really does it add to the mx for the Guild?

    Any independent agent can offer an alternative ‘pay up front reduced service model’ if they want, under their existing own brand ‘Basics/Essentials’. Once the property has had photos/floor plans done and is live on the portals, enquiries can be passed on to to the owner for them to arrange viewings and then negotiate their own offers with follow up.

    The agent takes a relatively passive role, perhaps sorting out the MOS when required, and offering a costed ‘chase up’ service.

    I understand that most of us wouldn’t want to do this really because we believe the vendor will get a much better end ‘walkaway result’ (sale price less fee) with our full service including directly contacting local contacts/hot buyers.

    So the only reason for having a separate branded ‘online lister’ service appears to be if it attracts or generates business you wouldn’t otherwise have had.!!!

    Giving it’s past performance to date, how can easyProperty do any of that?

     

    Report
  6. Mark Walker

    It would be very, very easy to walk away from £350 x 2 offices per month.  What are easyproperty’s investors buying if we do that?

    Report
    1. AgentV

      Is that what the guild costs?

      Report
      1. Mark Walker

        Yes.

        Report
        1. AgentV

          This is not meant to sound critical, I am just really interested. What does membership of the Guild give you for that?
          What are the parts that you couldn’t do inhouse yourself?

          Report
          1. RealAgent

            Well you can now offer Easyproperty as a cheaper alternative to your normal selling fees!!

            Report
          2. Mark Walker

            I’m not a fan, but I’m just 1 cog in our business.
            It gives us some shiny coffee table magazines to hand out.
            Moving in a slash your fee, slash your throats direction will probably see us kick it in to the long grass.

            Report
  7. Trevor Mealham

    Compared to Jon Cooke, Eddie commenting has only had a few years in the industry compared to Jon Cookes exceptional lifetime.

    My bet would be on Jon bringing some reality and true estate agency experience that proptech often doesnt understand to making TOSCAs funds work using more traditional methods.

    There is much much more to the property game than proptech alone.

    Report
    1. AgencyInsider

      Do you really think that Tosca will get all moist about ‘traditional methods’? I reckon Jon Cooke will spend as much time trying to fend them off from interfering as he will in trying to run the business.

      Report
    2. RealAgent

      Your hero worship is admirable if not a little cringing but the reality was Rob Ellice was also someone who had years of experience as an estate agent: the simple truth is that the tech easy came up with was non existent and not even in the bookshop, let alone page of the tech that PB invested in.
      A lame duck is a lame duck whoever’s yard its wandering around in.
       

      Report
      1. Trevor Mealham

        Away from cheap funeral stunts and budget, Robs not a bad guy when you get to know him.
        The funds he raised was admirable and in a more higher fee traditional model under Jon & Co strategy should gain a return on some of the lost spend.
        Good luck to them both.
        Eddie needs to see proptech should be there to assist. Not rule.

        Report
        1. PeeBee

          “Robs not a bad guy when you get to know him.”

          I assure you I will never, ever, try to put those words of ‘recommendation’ to a test.  The man alienated himself from an entire industry with one stupid stunt.

          Being in the same country is too close.

          “The funds he raised was admirable…”

          Oh GIVE OVER – his “fundraising” would have died on its’ @r$e if he wasn’t flying that orange flag – and you chuffing well know it.

          “Good luck to them both.”

          They should thank you for that wish for luck – they’re gonna need every nanogramme of it – and some.

          The hope of being ‘friend to all’ in this industry is the impossible dream you will never attain, Mr Mealham.  

          IF it’s not already too late… IF you haven’t burnt all of your bridges from both ends… I suggest you mount the one pony you think you can trick the most – and grip on for dear life with your @sscheeks.

          Report
  8. dave_d

    Can someone please explain how a company losing almost 1 million per month can be worth anything at all?

    Report
  9. MarkRowe

    Echoing @dave_d above…

    I’m really confused…. it makes a loss of 1million… it’s valued at 78million…

    I literally have no idea what’s going on…

    Ten years of business and whoever taught me to make profit is an idiot!!!! I’m really annoyed… I needed to make a loss to build a multi million pound company 🙁

     

    Report
    1. AgentV

      Then you launch on AIM…and sell as many of your shares as possible before, several years later, investors start to realise you are still spending their money to make even more losses!!!  

      Report
  10. BestInTheRoad28

    Its shocking to think that any Guild member would even consider taking up a license which will earn them £365 per property sale. Clearly this is a last ditch attempt for sleazy Property to get a foot hold in the online business. This is OnTheMarket take 2, scare mongering estate agents to purchase a license (only 20,000 address’s per license btw) and sign a letter on intent now before its too late!!! Please read carefully the letter of intent and their fee structure to see how scandalous this is. Guild members should unite against this asap and seriously consider their Guild membership.

     

     

     

     

    Report
  11. Thomas Flowers

    In my opinion, the biggest problem with the easyproperty brand is that it is not so easy to sell a property as their accounts prove!

    Around £11,000 per property listing is obsene!

    No wonder they went for the high-end market?

     

    Report
  12. KByfield04

    Wherever you sit on this discussion the key point in my mind is that no online offering has established a profitable base as yet. Whilst the ‘values’ climb this benefits shareholders (at least whilst they continue on this trend- and there are serious questions over that) but I have not seen any explain the genuine income benefits of any agent offering any online service. Therefore, unless the member agents have/get or are given shares, the simple question for them is surely- what will I make? Even if each branch generated 10 EP listings a month (and that would be an enormous uplift on current listings) would would this generate in genuine income to the agency as their ‘commission’? £1k….£2k? Now what time, effort & expense would have to be expended to generate that.

    Despite being a small agency we have looked long & hard at the value of offering a reduced digital offering (on brand or new) but have repeatedly decided not to as we simply can’t find any margins worth the investment. We recently lost our first property to PB which, when all said and done, actually meant no savings for the client- which was their sole reason for departing- so time will tell if we get them back. However having lost that 1 we’ve already taken around 20 new instructions this year so can’t say I’m worried- as Eric Walker keeps saying ‘I’m far more interested in the 95% they don’t have then discussing the 5% they do’.

    Ultimately it actually doesn’t matter what any of us outside the Guild/F&C think on this as their actions & attitudes that will dictate if this falls at the first hurdle. If not, then we will see if they, Rob, Jon et al can make this work but it is a huge hill to climb and I for one certainly won’t be losing any sleep over it.

    Report
X

You must be logged in to report this comment!

Comments are closed.

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.