EXCLUSIVE: OnTheMarket says proposed float does not mean abandoning core principles

A number of questions put by agents – including some of the issues raised by posters on EYE – have now been answered by OnTheMarket.

We should clarify that the following Q & A has been put together by OTM itself.

Was it the plan all along for Agents’ Mutual to seek an IPO?

There has been a lot of speculation around this but the answer is categorically no!

Agents’ Mutual was created in 2013 by a very small group of agent firms with the key objective of creating a new agent-owned, agent-controlled portal to challenge the dominance of Rightmove and Zoopla.

We believe that the potential raising of new capital via an IPO, if successful, will enable management to accelerate the growth of the OnTheMarket.com portal – already the UK’s third biggest player.

OnTheMarket.com launched in January 2015 with the properties of 4,600 branches. In January 2017, after just two years of operating, more than 6,000 branches were listing on OnTheMarket.com and it achieved traffic of over 11m monthly visits.

OnTheMarket.com made very strong progress with relatively modest funds at its disposal but it is now clear that a change in strategy, together with much greater growth funding, is needed to allow it to reach its goal of substantial market coverage of UK estate and letting agents and high levels of brand awareness and traffic.

We have concluded that the funds required to grow substantially cannot be obtained from members using the existing corporate structure.

Had there been more comprehensive support from the UK’s 18,500 estate agent branches at the outset, Agents’ Mutual could have enjoyed a stronger position from which to challenge pricing and behaviour in the existing portal marketplace.

Isn’t this just another Rightmove?

Far from it! The proposed changes have the power to be transformational but do not mean an abandonment of the principles around which Agents’ Mutual was built.

The core proposition of Agents’ Mutual and its OnTheMarket.com portal has always been to provide a strong challenger and alternative business and brand to the Rightmove and Zoopla duopoly with fair fees for agents and an excellent search facility for consumers.

This is a core principle that still stands. Agent ownership and support of OnTheMarket.com remain essential to the portal’s future success albeit as shareholders rather than members.

The strategy of creating competition within the marketplace through price disruption is still our planned path of progression.

Based on the principle of sustainable fair pricing, the new listing agreements which Members are being asked to enter into to support the proposals and the new strategy, have a fixed tariff which guarantees no price increases for the first two years and a maximum annual price increase of 5%  thereafter during the five-year listing period.

Crucially, it is proposed that – if successful at IPO – OnTheMarket plc will be majority owned by agents who are not being asked to invest further as part of the IPO.

What plans are in place for management’s remuneration?

The plans on how key staff will be remunerated, should the IPO be successful, have been presented on page 16 of the Member Scheme document. The management’s shares will be subject to the same lock-in period as shares belonging to existing member agents. Ten per cent of the aggregate can be sold from the first anniversary of the float.

A further 10% can be sold from the second anniversary. Eighty per cent cannot be sold until the fifth anniversary of the float.

How does the membership share allocation work?

All member firms not in breach of their existing listing agreements – irrespective of size – will receive a base allocation of 4,000 ordinary shares in OnTheMarket.

The balance of the new OnTheMarket shares, representing the largest part of the issue, will then be calculated according to the listing fees they have contributed since launch. Loan Noteholders will, if the relevant schemes are approved, exchange their existing Loan Notes for Loan Notes in OnTheMarket and these will then convert into shares in OnTheMarket on IPO at the IPO price.

There is no price to pay for these shares received on completion of the restructuring.

As announced, the board, following consultation with Zeus Capital, is seeking a valuation for OnTheMarket of between £200m and £250m but the valuation will ultimately be set by investors.

You say you believe you can raise £50m of investment for the portal. What will this money be spent on?

If successful at IPO, up to £30m of the funds raised is intended to be used to support a nationwide marketing campaign through TV, online and print media in the first full year of the campaign as well as to expand the capacity for key personnel, including within the technology department.

Why are you lifting the ‘One Other Portal’ Rule?

The market strategy for entering the market in 2015 was considered to be the right one and the Competition Appeal Tribunal has recently unanimously upheld the key terms in the current listing arrangements.

It has always been the case, however, that those arrangements would be kept under review and, with the benefit of substantial new funding, we believe that lifting the ‘One Other Portal’ rule now for members will allow OnTheMarket.com to make faster progress towards full scale and to deliver its core long-term purpose than may be possible with it in place.

And what about online-only agents?

For similar reasons, we believe the time is right to review our listing eligibility criteria with a view to broadening the appeal and coverage of the portal, to reflect major changes in the market landscape.

The policy has been about ensuring a full service is offered to customers. This will continue but will include agents who offer at least the option of a full service without necessarily providing this from a ‘bricks and mortar’ high street branch.

Since the launch of OnTheMarket.com, there has been considerable convergence between so-called ‘hybrid’ agents and so-called ‘traditional’ agents: the hybrid agents have undoubtedly increased their market share, albeit so far only accounting for around 6% of sales listings, and traditional agents have responded competitively in a variety of ways, including by the creation of their own online or hybrid services and the exploration of partnership arrangements with online/hybrid agents.

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67 Comments

  1. Simon Bradbury

    Can’t imagine that there will be many comments on this item….

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    1. essexp6778

      This gets a big fat NO from me. Everything around this rushed and devious IPO is totally misleading.

      When you dig into the detail you can clearly see that Springett is making away with it. They talk about him having 3.9m shares and then go on to talk about another 4.7m shares allocated to ‘4 key management’. No one will answer this question, but I assume that the main beneficiary of those 4.7m is MR IAN SPRINGETT?!

      I did not buy into agents mutual to see Ian Springett walk away with 20% of the business, and the fact that these ADDITIONAL 4.7m shares were allocated from an agreement made in 2016 tells me that this has been the plan for some time!!!

      Funny that this wasn’t included in their Q&A.

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    2. Bless You

      so its agents fault for not joining? I joined, realised you had no plan and left. I wasn’t wrong. Its like me saying , we had to close agent because pesky customers wouldn’t use us… Its your fault! You have also made rightmove stronger! Online agents ok but not pay any way agents. Resign!

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      1. aidan branch

        Couldn’t agree more – and with the comment from essexp6778, has Mr Springett spent all the money he made from Primelocation and now needs to raise funds again !!

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        1. AgentV

          Does anyone know how much he made out of prime location?

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  2. danny

    Ian Springett says this wasnt the plan from the start… it was certainly the plan less than a year in , when OTM where still growing…. from his own court case …a case that I suspect he forced upon Connells thinking they would lose and therefore giving him the perfect platform to IPO without it being his fault or about the perfromance. Kudos to him he had the b*lls to just do it anyway .THe important wording in here is “102B IS set out the roadmap to the ownership model needed” … less than a year in
    “Meeting notes of 21st Jan 16 – David Livesey, Connells; Alison Platt, Countrywide; Ian Crabb, LSL Holdings. • 98BMeeting effectively ‘convened’by DL. Relatively short notice. • 9BIS opened: big potential opportunity to combine AM existing membership strength with their strength to create the market leading portal. • 10BAs a publicly quoted business, potential market cap could reach several £Bn – why not own it? • 10BIC queried the route map – how to advance the business to and beyond the tipping point. Would this work from an economic viewpoint? IS covered the switch of their 90,000 listings from Zoopla and the likely surge in agent membership. Our model works on conservative ARPA and still generates big surpluses. • 102BIS set out the route map to the ownership model needed. o 103BDisinvest elsewhere o 104BEnter contract with AM (inc OTM + 1) and invest in 0% loan notes with a multiple return at the end of the term contract.
    o 105BInclude a ‘conversion’ clause in the event the Company moved to ‘limited by shares’
    Proposition two members: close membership, IPO (at say £500M). Issue equal shares to current membership and authorise further issue for capital raising and to incentivise key agents. Each current member holding would have paper value of £100k after dilution of their stake to 60%. Some of the shares used to raise capital, others to meet conversion from Loan Notes, others to incentivise further key firms (ZPG partners). Further agents joining OTM are just customers. o 107BAll members remain OTM + 1 and this gets us past tipping point 1 towards tipping point 2 where we are seen as strong enough for agents to begin withdrawing from Rightmove. o 108BEndgame – 15,000 branches at an avg monthly fee of say £1000 with no real need to list anywhere else. £118M income before any other revenue sources. o 109BUnder any scenario, the members need to be protected and receive the elements of the proposition they bought into = sustainably reasonable and fixed listing fees, no internet-only. • 10BAP queried the desire of the ZPG partners to join. IS said conversations had taken place, with one interested in joining simply to support the principles of what we are currently doing and another looking for a financial incentive. None seem locked to ZPG. • 1BDL pushed dropping one other portal and AP supported, saying the market should decide and the best portal would win – they would provide us with extra stock to put us in the game. IS said there is no magic – RM is now the only portal with near 100% stock and matching income so is winning. Would not have entered the market on any other basis than agents backing and directing their stock via OTM + 1 rule. Still plenty of mileage in that and consistent with the ‘most interesting scenario’. • 12BIS asked what success resulted from them supporting OTM looked like for them. DL said it would be really strong portals competing, with them potentially benefitting from an investment in one or more. • 13BDL asked what we would do if the three of them don’t join. IS said we would carry on growing organically with the support of the small and medium firms which still represent the majority of the market. OTM + 1 would remain as it is key to reaching the No. 2 position as the first milestone. • 14BAP queried the strategy – internet denier/consumer wants internet only. IS said pure internet plays are simply parasites only viable because the portals allow them to operate alongside the main customer base of high street firms. Why allow margin to be eroded in this way and allow this business model to flourish at agents’ expense. As the market currently operates, the portals win either way. • 15BAP asked how we value the business. IS said (1) create a business projection based on the 3 joining OTM + 1 which would show strong forward profit and cash generation; then (2) approach an investment bank for a view on IPO value. IS said we all probably new suitable investment houses – it was agreed that it should be done by AM to avoid hares running. All felt Close Brothers would be a credible source for this. The forward income worked just based on UK resi listing fees but there would also be substantial further revenue potential from Overseas, Commercial, and commercial partnerships provided these did not detract from the core purpose.”

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    1. HJ12

      Morning Danny lol

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  3. GPL

    I’ll leave the floor to other contributors… for now.

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  4. mark_one

    It also would have been nice to know what happens to the members that vote against the IPO. Ros, can you confirm whether these agents are given their shares and told to leave.

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  5. Curious george

    Isn’t this just another Rightmove?
    ‘Far from it! The proposed changes have the power to be transformational but do not mean an abandonment of the principles around which Agents’ Mutual was built.’
    what a lot or tosh! A bit like old boris Johnson with the Brexit promises!
    Thr bottom line is when share holders are involved ,profits are required. Any agent that thinks differently is a turkey voting for Christmas!
    In my opinion, the only real alternative to RM or Zoopla is allagents. We always ensure clients are told of their portal when we are up against a competitor and it works!

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  6. PRman

    Typical tosh. Blaming two thirds of agents for recognising it was a rubbish product and not buying it instead of a mea culpa from the architects of the product who got it so wrong. Smacks of British Leyland in the good old days. Management blamed everyone – customers, unions, people not buying their dreadful cars, and anyone else walking past the office when they were actually the problem and should have sacked themselves. OTM is travelling the BL road, but at a much faster pace! Time for Springett et al to turn off the lights (were they ever on?) and lock the door.

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  7. revilo

    “The policy has been about ensuring a full service is offered to customers. This will continue but will include agents who offer at least the option of a full service without necessarily providing this from a ‘bricks and mortar’ high street branch.”

    I just spat my cornflakes out!

    Why should we proper agents, give the time of day to these on-line offerings that are, quite frankly ‘carp’ at any form of customer service?

    This is supposed to be our ‘agent owned’ portal – give the management team a good appropriate salary and split the portion of shares among the members. If the management team doesn’t like it, we find another one!

     

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    1. Typhoon

      Revilo I totally agree with you on the on-line issue. And what some ‘say’ they will provide will never be provided,but it will be enough to get them past the front door onto OTM portal.  And OTM will never bother checking ’cause they want the revenue. A MAJOR vote looser for OTM in persuading people to stay or join. Frankly I don’t care how much Ian Springiest and his board make personally. What I want to see  is a portal that ‘RESPECTS’  proper full service agents and who recognises that half baked offerings of on-line services, are killing the industry and giving totally “CARP”,  as you so delicately put it, service to the public.

       

      It is not possible to offer  top quality, full fat services that attend to the real needs of buyers and sellers by offering massively cut price services. You need volumes and quality of staff to do so and they don’t work for peanuts. OTM are about to (if they succeed with their IPO) join with RM and Zoopla in massively disadvantaging the buying and selling public, who “believe” they can get what is truly needed for pretty well nothing.

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  8. J1

    At least you know where you stand with Rightmove and Zoopla – they take your monthly fees and you feel like you are being robbed – but you understand the concept

    This lot don’t know where they are going, where they have been or how they got there and are not prepared to to be honest about it

    Rename it Not To Be Trusted .com

     

     

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    1. Marc Cottrell

      Sorry J1 but that domain name has been secured by TrustPilot.com!

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  9. Thomas Flowers

    IS is brilliant at spending other peoples money for his own financial advancement,

    The really telling aspect is that to raise £50 million it appears that IS, some board and ‘Key workers’ get £60 million…. if it all goes smoothly?

    What happens if in say 2 years all that money has been spent and IS and others decide to sell the business?

    Do these share options give IS and those others up to a 22% stake in this business for nothing?

    Remember IS is already highly paid.

    What about YOPA?

    Apparently, Easyproperty has signed up to a third of their members via the former Guild who now provide a free LPE and local branch who also have to pay a £500 PCM licence fee!!

    Would any agency network have to consider this option if they are looking for further financial gain post vote?

    A third of OTM 6000 branches is 2000 free LBE’s and branches…..four times larger than PB?

    Imagine the share price of this call centre agent if it then decided to float?

    Also, imagine who may benefit from this?

    Agents have to consider the ‘What if’s’?

    Infamy, Infamy as a small independent estate agent has everyone got it in for me?

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  10. GilesH

    THIS ARTICLE IS PROOF THEY ARE STRUGGLING FOR ‘YES’ VOTES, OR AT LEAST VERY CONCERNED.

    IT’S A NO FROM ME. FAT CATS MAKING AWAY WITH IT – THERE IS A CLEAR REASON THEY DID NOT GIVE THE DETAIL HERE ON PAGE 16 OF THE MEMBER SCHEME DOCUMENT…WOULD GARNER EVEN MORE ‘NO’ VOTES.

    BREAK FREE….

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  11. AgentV

    Spending £30 million on advertising to grow awareness with the public is not going to make a whole lot of difference unless the stock levels of properties are much higher.

    That means many new members agents will be required. What is possibly going to attract agents that aren’t already members to join after the IPO has been instigated?

    Or with online listers allowed to join, are we going to see thousands of YOPA adverts everywhere claiming they are the only agent to ‘LIST ON ALL THREE MAJOR PORTALS’ trying to force everyone to join to compete?

     

     

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    1. Typhoon

      Very possibly. Another nail in the “real” estate agents coffins.

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    2. MF

      Spot on!!!

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    3. AgentV

      TV advertising is not the answer……how many of us watch live TV anymore?

      Just one million spent on intelligent marketing through social media, giving the public new innovative products that they want, would be far, far more effective and also create lots of new vendor leads for members at the same time!

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      1. PeeBee

        AgentV.  Today you say

        “TV advertising is not the answer……how many of us watch live TV anymore?”

        But on 30 May you were singing from an entirely different hymnbook in response to the latest ad campaign from the boys in Purple:

        “These adverts are totally cynical, but are working with the public.”

        I’m sorry, mon ami – but you cannot win an argument when you are both proposer and opposer.

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        1. AgentV

          But I still wouldn’t propose TV advertising using honest marketing to generate trust. I think it is a lot of money that will make little difference and a poor return on investment…..however if you want to use cynical and misleading marketing to gain traction, then clearly it can work and be quite a good return on investment.

          Social media on the other hand is where you fear to tread if you want to used cynical methods…..but it is the place to build credibility and trust by engaging with people, and at a relatively much lower cost. You just need the right type of message to engage with the audience.

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          1. PeeBee

            Sorry but that ‘answer’, doesn’t.

            How can you possibly think that people will swallow the principle that an honest TV advert won’t work but a misleading one does?

            You and I are not going to agree on this point – and I’m not wanting to waste productive time and energy slugging it out… and I’m pretty sure you won’t want to either (especially as you know I’m 100% right! ;o) ) – but it is a point that needed raising, V

            By the way, if I could ask you to return to a previous article comment thread you have an outstanding question or two awaiting your response:

            http://www.propertyindustryeye.com/daily-mail-to-clarify-agents-true-fees-as-gesture-of-good-will/

             

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            1. AgentV

              1. How much has that instruction cost you to date?…… My time, but I like doing viewings and meeting new people anyway. Always a chance I might also meet someone with another property to sell!
              2. How much do you intend to spend – in total – on servicing that instruction?….. Once again my time as I will be the one doing all the work on it. The overheads have to be paid whether I listed this property or not.
              3. What is the actual cost to you per completed listing?……. Probably in the region of £600 to £700 plus my time.
              By the way I still think TV advertising is very expensive for what it achieves, boring run of the mill adverts like the Z, RM and YourMove ones get forgotten quickly, and there are much better more cost effective ways available of achieving brand awareness. That’s my opinion.
              However, maybe I am wrong about how many people still watch live TV!

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              1. AgentV

                Now I have answered your questions can you answer one of mine please;

                What is your opinion of the proposal to float OTM and the money the board will personally make out of the recommendation?

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                1. PeeBee

                  Personal opinion or professional?

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              2. PeeBee

                Thanks for the swift response.  I thought you’d simply missed my post.

                A few more questions based on your answers.  Humour me if you will…

                “1. How much has that instruction cost you to date? My time….”

                Really? Not a single penny?

                NO admin costs…?  NO staff to pay every month…?  NO share of overheads…?  NOTHING to list it on RM/Z/whatever per month/day?

                NO postage…?  NO print costs for details…?  FREE gas, electric and water to your branch…?  NO rent or rates to pay…?

                NO transportation costs for viewings…?  NO press advertising…?  NO board…?  And, most crucially,

                NOT A SAUSAGE paid to you by way of remuneration.  Work carried out totally pro-bono…  in your own spare time…  outside of working hours.

                Matey – I’m in awe.

                “2. How much do you intend to spend – in total – on servicing that instruction? Once again my time as I will be the one doing all the work on it. The overheads have to be paid whether I listed this property or not.”

                See your answer to 3 to realise just how wrong the above answer is…

                “3. What is the actual cost to you per completed listing? Probably in the region of £600 to £700 plus my time.”

                Can I ask how many sales +/- you complete on in a 12-month period?  Ten?  A hundred?  More?

                Thanks in advance for the answers to the above.

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                1. AgentV

                  PeeBee…….In response to your observations on question one…all those things are covered by the £600 to £700 that I cited. What is left covers my and any staffing payments (which I qualified as ‘my time’ because I will be the one dealing with this sale). I answered as honestly as I could. Why are you accusing me of my answers being wrong?

                  But what are you really trying to get at here? Would you answer these further questions giving potentially sensitive commercial information about your business on open forum? For what purpose?

                  However if you directly email me on in@agentv.co.uk we can talk.

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                  1. AgentV

                    What about your personal opinion of the proposal to float OTM and the money the board will personally make out of the recommendation?

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                  2. PeeBee

                    “Why are you accusing me of my answers being wrong?”

                    I am “accusing you” of nothing.  I simply believe that you are substantially underestimating the cost to you of this listing.  My questions are prompts to make you reassess your apparent belief that this listing is money for nothing.

                    “Would you answer these further questions giving potentially sensitive commercial information about your business on open forum?”

                    You are anonymous.  I am anonymous. How can information be “potentially sensitive” given this scenario.

                    I know to the penny how much every completion costs me.  I sincerely hope you do too – but your answers don’t convey that as a certainty.

                    “However if you directly email me on in@agentv.co.uk we can talk.”

                    Why would I do that?  We ‘talk’  via DM on Tw@tter all the time.  We have discussed this very subject on that platform on August 1.

                    As I said to you then, we have differing opinions.

                    Try looking at my posts in a different way that an attack – which is how you seem to be viewing it now.

                    Look – if you want to take non-profitable business on – then knock yourself out.  There’s plenty of it out there.

                    Scenario: You sell a listing for £950 (nett of Vat).  Your CCPC are £1200.  You’ve lost £250 on that single deal.

                    How many of those can you afford to do in a year, if you make, say, 20% profit on every completion?

                    I don’t expect you to answer that – but I sincerely hope you now understand my “purpose”.

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                    1. AgentV

                      In answer to your latest observations……I am not anonymous. Cyberduck found me in what he claimed was a very short time and I don’t doubt he was telling the truth, because I would know how to find out who I am quite quickly. I have not tried too hard to hide my true identity.

                      The £600 to £700 average cost in overheads per completed sale (excluding payments to staff) is pretty damn accurate (and I can prove them), because we have to run a very tight ship keeping overheads to a minimum…. and I have developed some fantastic working systems in the last 3 years to help. Some of those systems are the very ones I think could be developed to help the independent community against the online listers.

                      The fee I charged was £1,149 inclusive of viewings. It was a not a loss making transaction for the business. If it had been I would not have taken it on. Plus, there was no risk at all of doing a shed load of work for no fee at all, because the owners needed to change their minds as they could not find anywhere for sale they wanted to move to….that is happening more and more in our neck of the woods.

                      The range difference between £600 and £700 of £100 is because I cannot of course guarantee the number of completions happening each month.

                      So what about your personal opinion of the proposal to float OTM and the money the board will personally make out of the recommendation?

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  12. markpne

    Just in office rightmove putting my fees up £150 iv only one office where will it stop

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  13. Industry_Pro

    For those that struggled to digest the original post [like me]………….
    Apologies Danny.
    Ian Springett says this wasn’t the plan from the start…
     it was certainly the plan less than a year in , when OTM where still growing…. from his own court case …a case that I suspect he forced upon Connells thinking they would lose and therefore giving him the perfect platform to IPO without it being his fault or about the perfromance. Kudos to him he had the b*lls to just do it anyway .
    The important wording in here is “102B Ian Springett set out the road map to the ownership model needed” … less than a year inMeeting notes of 21st January 2016 – David Livesey, Connells; Alison Platt, Countrywide; Ian Crabb, LSL Holdings.
    • 98B Meeting effectively ‘convened’ by David Livesey. [at] Relatively short notice.
    • 9B – Ian Springett opened: big potential opportunity to combine AM existing membership strength with their strength to create the market leading portal.
    • 10B – As a publicly quoted business, potential market cap could reach several £billion – why not own it?
    • 10B- Ian Crabb queried the route map – how to advance the business to and beyond the tipping point. Would this work from an economic viewpoint? Ian Springett covered the switch of their [3 major firms] 90,000 listings from Zoopla and the likely surge in agent membership [as a result] . Our model works on conservative ARPA [average revenue per agent] and still generates big surpluses.
    • 102B – Ian Springett set out the route map to the ownership model needed.
    •103B – Disinvest elsewhere
    *104B Enter contract with AM (inc OTM + 1) and invest in 0% loan notes with a multiple return at the end of the term contract.
    *105B – Include a ‘conversion’ clause in the event the Company moved to ‘limited by shares’ Proposition two members: close membership, IPO (at say £500M). Issue equal shares to current membership and authorise further issue for capital raising and to incentivise key agents. Each current member holding would have paper value of £100k after dilution of their stake to 60%.
    Some of the shares used to raise capital, others to meet conversion from Loan Notes, others to incentivise further key firms (ZPG partners). Further agents joining OTM are just customers.
    *107B – All members remain OTM + 1 and this gets us past tipping point 1 towards tipping point 2 where we are seen as strong enough for agents to begin withdrawing from Rightmove.
    *108B – Endgame – 15,000 branches at an average monthly fee of say £1,000 with no real need to list anywhere else. £118m  [actually equates to £180M (15,000×12,000per annum per office)– a typo error perhaps?] income before any other revenue sources.
    *109B – Under any scenario, the members need to be protected and receive the elements of the proposition they bought into = sustainably reasonable and fixed listing fees, no internet-only.
    • 10B – Alison Platt queried the desire of the ZPG partners to join. Ian Springett said conversations had taken place, with one interested in joining simply to support the principles of what we are currently doing and another looking for a financial incentive. None seem locked to ZPG.
    • 11B David Livesey pushed dropping one other portal and Alison Platt supported, saying the market should decide and the best portal would win – they would provide us with extra stock to put us in the game.
    – Ian Springett said there is no magic – RM is now the only portal with near 100% stock and matching income so is winning. Would not have entered the market on any other basis than agents backing and directing their stock via OTM + 1 rule. Still plenty of mileage in that and consistent with the ‘most interesting scenario’.
    • 12B – Ian Springett asked what success resulted from them supporting OTM looked like for them. David Livesey said it would be really strong portals competing, with them potentially benefitting from an investment in one or more.
    • 13B David Livesey asked what we [OTM] would do if the three of them [three big firms] don’t join. Ian Springett said we [OTM] would carry on growing organically with the support of the small and medium firms which still represent the majority of the market. OTM + 1 would remain as it is key to reaching the No. 2 position as the first milestone.
    • 14B – Alison Platt queried the strategy – internet denier/consumer wants internet only. Ian Springett said pure internet plays are simply parasites only viable because the portals allow them to operate alongside the main customer base of high street firms. Why allow margin to be eroded in this way and allow this business model to flourish at agents’ expense. As the market currently operates, the portals win either way.
    • 15B – Alison Platt asked how we value the business. Ian Springett said;
    (1) create a business projection based on the 3 firms joining OTM + 1 which would show strong forward profit and cash generation; then
    (2) approach an investment bank for a view on IPO value. Ian Springett said we all probably knew suitable investment houses – it was agreed that it should be done by AM [secretly] to avoid hares running.
     
    All felt Close Brothers would be a credible source for this. The forward income [model] worked just based on UK residential listing fees but there would also be substantial further revenue potential from Overseas, Commercial, and commercial partnerships provided these did not detract from the core purpose.”

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    1. Industry_Pro

      The “Dream Day” revenue to be generated by OTM is stated as £180m per annum [from the meeting minutes as above].

      Equates to 15,000 branches at £1,000 per month per branch, again as above.

      Assuming similar operating costs to RM, say £55m per annum, where would the remainder of the revenue go [£125m] ?

      Interest payments to investors and dividends to shareholders perhaps.

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  14. Michael

    “All member firms not in breach of their existing listing agreements – irrespective of size – will receive a base allocation of 4,000 ordinary shares in OnTheMarket.” Odd, para 9 (those in breach) says differently with a negative, if in default and don’t either rectify it or vote Yes ….. won’t receive shares. ie this recent explanatory statement says those in breach get no shares but the formal document implies that you will if you vote Yes. I guess the document takes precedence over the explanation.

    Also re shares lock in periods, we the members would need to keep 80% for 5 years but 2.4 of ‘Directors & Management MIP shares’ document says that they are not restricted by any lock in period if ‘corporate events’ occur such as a take over or ceasing employment with OTM. So it looks as though should IS cease employment upon flotation he could dispose of his shares! Unlikely of course but a bit much to decide that it makes good business sense to restrict the members from share sales but to have far more relaxed restrictions for management given MIPs.

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    1. AgentV

      Oh so now we see it for what it is.

      You get potentially £20,000 worth of shares whilst Mr S gets a thousand times more. He can sell when he likes while you are locked up for five years with the online listers!

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    2. Thomas Flowers

      Good spot Michael!

      This changes what i said above.I could not see a how IS and others could dispose of their share shortly after floating- this is the missing key?Another ‘What if’?

      The OOP win may put certain prestige agents in a much stronger position to agree ‘terms ‘ with a certain prime portal that recently relaunched?

      However, to achieve any such ‘transition’ the OOP rule must be dropped?

      Why win the OOP rule one month and then wish to drop it the next?

      Do the board really imagine they could triple the membership via an IPO?

      How many non-members would trust them now?

      Where would that leave IS and others?

      It appears that by resigning from OTM after a YES vote they could seamlessly dispose of shares prior to any such potential transition?

      Presumably IS would retire to a tropical island somewhere very far away?

      A NO vote would really upset any such scenario?

      Hope IS is not counting the votes?

      A scenario worth considering before you vote?

       

       

       

       

       

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      1. AgentV

        Perhaps PIE should ask who is counting the votes and adjudicating?

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        1. PeeBee

          GPL posted precisely this yesterday.

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  15. AgentV

    Imagine being locked in a prison cell for five years with ALL the owners of the online listers, having to listen to them hour by hour tell you why they are bigger, better, cheaper and more effective than you!

    JUST IMAGINE!!!!!

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  16. Thomas Flowers

    parasite

    ˈ

    noun

    An organism which lives in or on another organism (its host) and benefits by deriving nutrients at the other’s expense.

    Sometimes things you say come back and bite you?

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  17. AgentV

    When I get home tonight, to relax, I am going to watch the latest series of Game of Thrones. There is far less happening and it will be far less stressful than watching what is going on in our industry at the moment!

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  18. Marketshare

    What plans are in place for management’s remuneration?

    I think I might also be a little embarrassed to mention numbers and refer people back to the original document.

    But, deep breath, the total number of shares that OUR management team has awarded themselves is 8,780,488.

    Although to be fair that has been divided by 5 of them…..

    Would love to have been a fly on the wall when they decided on the base allocation of 4,000 shares for us members (who own the portal).

    Dulcit tones of IS in your head….

    ‘So thats one for them and two thousand one hundred and ninety five for us, one for them and…..’

     

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    1. AgentV

      Reward for throwing the towel in!

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  19. followme

    ‘The Weasel of the Wharf’

    I don’t believe they will struggle to get the yes vote, especially after listening to the comments made at the end of yesterdays regional meeting!

    Having sat through the lacklustre presentation (complete u-turn) yesterday with Mr Springett, who had to fight back the smile every time he mentioned that, “the board is fully behind this, we think its a good idea”, due to his knowledge that yes, he gets £20million or thereabouts from the IPO. Oh, but hold on, he can only cash in 10% in the first and second year. That’s not bad, 2 million a year.

    I believe in the concept of OTM, the fence sitting agents who are quite frankly moronic, are the reason that OTM may not work but the lie that is being spun by the OTM management is a bitter pill to swallow.

    Hat off Mr Springett, you are a genius! And those who don’t believe this will go through are delusional; agents making a decision on yes or no, with a yes providing the average agent a potential £35-£50k. The £££ signs will talk!

    I’m all for the next project Ian!

     

     

     

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    1. AgentV

      But is it only estimated at £20,000 isn’t it (4,000 shares at estimated £5 each) and you have to pay pretty much that over the next five years in fees anyway. Or am I getting the sums wrong.

      You get back what you have paid over the next five years and Mr S walks away with 40 years worth of salary….which amounts in real terms 10 to 20 working lifetimes of money for most people!

      For throwing the towel in!

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  20. Marketshare

    To sum up.  If OTM gets the ‘yes’ vote we no longer become a Mutual owned equally by members but transition into a PLC with a substantial number of shareholders who are not agents.  The sole purpose of a PLC is to make a profit which has been confirmed by the board with confirmation that there will be a capped rise in fees in years 3 and 4 and un-capped thereafter.  In addition, they will launch premium products setting agent against agent with the sole purpose of generating more revenue.  Ian stated at my meeting that he thought it unfair we spent extra on premium products with Rightmove but not with OTM.

    The PLC will then issue use up to £100m of new share options to ‘buy in’ more business (and in the process dilute our holding).  Targets are likely to be the big corporates, Countrywide, LSl and Connels (insert irony).  These organisations have stood against our Portal and could now be better rewarded than those agents who helped establish OTM and fund it with loan notes.

    Any agent who thinks they will have even a modicum of control over the PLC is deluded.

    We lose control of our data, we lose control of pricing, we lose any chance of controlling the online market that relies 100% on OUR listings.

    To those agents who think there is no alternative, in 30 months we have created the third largest portal, the website is up and running and we have about one-third of all offices in the UK on board.  OTM have done little or nothing to generate new business while the court case was running.

    Perhaps a scenario like this is exactly what we need to give ourselves a kick up the backside and realise that if we want this to work we can’t rely on the board, we need to roll up our sleeves and work together on a local basis.  If every member agent could convince just one other agent then we would have almost 70% of the entire market.

    This is our last chance to take control of what we already own, it is time to work together, time to take the long term view and say NO to abandoning what could be a pivotal element to the survival of independent agents in the coming years.

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    1. AgentV

      Marketshare,

      Are you directly in touch with Graeme? With passion like this I think you could really help with the construction of future newsletters.

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  21. Dannyman4410

    Member firms were asked for a 5 year listing commitment when OTM was originally launched. We are now being asked to enter a new 5 year listing agreement should the IPO succeed. 2 1/2 years into the project Mr Springett is now telling the members that it’s not working, but by trusting him and committing to a further 5 years there will be a new project to take on the two main portals. In return for this commitment we will get an allocation of shares which cannot be fully realized for 5 years. This seems yet another large financial gamble for independent agents to make.

    At the roadshow I attended last week IS suggested the new OTM could entice large agency groups as well as fence sitters to join by offering heavily discounted rates to boost membership. Surely this can easily be done at the moment if the desire is there from the OTM board. Instead the message was the current set up is not working, but a new listed portal will and if the members decide not to vote ‘yes’ there seems little future in OTM as a mutual. It all seemed pretty defeatist unless there is an IPO……

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    1. AgentV

      Are these really the kind of attitudes that were needed to make this project a real success? They are throwing the towel in to achieve personal financial gain….and in effect they apparently can disappear into the sunset after selling their shares almost immediately, while all the existing members are locked up into a contract where they have to suffer the online listers joining in and ridiculing their businesses for the next five years.

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  22. AgentV

    I have a totally new 5 part plan post vote;

    1). A management team is installed consisting of people from the industry who are dedicated to the ideals of the original offering and particularly in the ‘Full Service’ concept.

    2). Rules are put in place to eliminate any chance of the management team working towards their only potential gain rather than what is for the greater good and best for the membership.

    3). A comprehensive member engagement system is put in place with regular communication, quarterly regional get togethers and a voting system for any significant major issues raised.

    New ideas and innovation are taken on board and used to develop new products specifically for the benefit of members in finding and creating more business.

    4). An intelligent marketing campaign is rolled out through social media (not far more expensive and less effective TV advertising) to increase public awareness by engaging with people, drive new business to members and attract other agents and their stock to join,,,,,,creating even more awareness, income for the business and growth.

    5).  All members are given a ‘Buy Out’ guarantee which means that when they retire there is a formula in place to buy out what they have contributed in the years they have been a member. This will be paid for by a contingency fund set up for the purpose and will reflect a proportion of the value of the business equivalent to if it were a listed company at that point. Longer term members will have built up more…..incentivising and rewarding the original members more with hopefully a nice little pension pot.

    Put this in place for the next two to three years and then look at the whole situation again. If at that point the a majority of the increased membership wanted to float, then at least it would be worth far more than it is now as a successful growing business with a management team behind it driven to make it succeeed rather than being financially rewarded for it faltering on the brink of failure!

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    1. AgentV

      I would welcome any comments…. particularly from Graeme.

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    2. fluter

      Sounds a far more appealing proposition to the one being put forward. Am I the only person who thinks the potentially enormous financial gain available to “The Management” might have some bearing on their thoughts as to the best way forward for OTM? Any gains should be linked to long-term performance, just as us agents do day-in-day out.

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  23. revilo

    Without our properties, they have no share price!

    Remember that and remember who’s actually in the driving seat here!

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    1. Thomas Flowers

      Mmmmm……..

      So any agents voting no could hide their properties from today similar to an exit poll?

      Would your sellers or landlords care during this holiday period?

      What do you think Graeme?

       

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  24. Michael

    As an agent ‘in breach’ I have decided to vote Yes. Not entirely happily but I have. Reasons:

    If I vote No my vote will not be counted in the % as the election is set up such that ‘in breach’ agents may have their Yes vote counted but may not have the No vote counted. Remarkable but true.

    A main reason for recently going in breach of OOP was a belief that the court case must go the other way, yet it didn’t. I am now contracted to Zoopla for another 10 months and finding them very good in fact. I had a strong objection at the time to OOP and was reluctant to join Agents Mutual in the first place over this rule, so if the float happens then I am (relatively) a happy bunny as OOP will disappear. I don’t like the 5 year tie in & feel it should be 2 years but can’t change the rules. neither do I like the money that IS & chums are allocating to themselves, with particular objection to members being tied in for 80% over 5 years but the management writing themselves an escape clause as mentioned above. We should all have a similar escape clause and should not have to impose the agreement on any future buyer of our companies, but there we are. ‘Mutual’ agreement !?

    If this all fails I use man maths to say that I haven’t lost a potential £50k of shares, I have lost the repayment of £2,000 of Gold member loan. That concept is less painful.

    2 days ago I was upset at the manipulation and determined to vote No. I am still upset at the manipulation but somehow still want to believe in this product and its use in keeping down the charges of competing portals.

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    1. AgentV

      How do you work out £50k of shares. Is that for more than one branch?

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      1. Michael

        No, I think my form said just over 12,000 of shares (as a gold member who gave a start up loan of £2k) with an expected value of £4-5 each. I know little of shares but think the value depends on market take up of the whole offering

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        1. AgentV

          Thanks Michael,

          I thought other people were quoting 4,000 shares.

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          1. Michael

            I believe the allocation relates to how much you have put in & whether or not you made a loan. There also appears to be a formula that relates to any discount in fees that you may have had by being an early adopter which, going forward, is lost as post float the monthly fee will be calculated differently. There will be a variety of entitlements depending on individual circumstances. In my own case there will be a conversion of the £2,000 loan note and a membership conversion entitlement of !2,192. The formula used will doubtless be identical for all ordinary members.

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  25. GPL

    Another day nearer V-Day.

    It’s good to see/read of more detail that highlights why those wishing to Vote NO have very good reason to arrive at that decision.

    I’ve always said I respect everyone’s choice to Vote their way. Those firmly Voting Yes have their reasons, I won’t offer further my opinions why, a firm Yes Voter should have little or no interest in my opinion.

    Those wishing to Vote NO, in my opinion, have considered Our Industry and what Agents Mutual was supposed to deliver, hasn’t… and claims that it will ….if we just say Yes …everything will be alright when the £50 Million arrives, The New Board arrives and the easily, if very shortly scripted New Plan stutters into action.

    What Members can rely on is the “Status Quo” – we are safe hands as Shareholders… as Members we had NO say, as Shareholders it’s not likely that we will have a say. So, a consistent approach. The Boardroom Door will swiftly shut, the cheers, the clink of champagne glasses… personal financial futures glowing Red Hot! …….and NO Members to worry about, just like before.

    The thing is… there wouldn’t be a Vote NO Campaign if Ian Springett and The Board had delivered a much better performance, communicated better with the Members, drawn from the vast pool of Member experience and ideas to help form future strategy …..and most crucially ……brought a clear set of proposals/options for Members to consider/discuss and agree a strategy which the Members would collectively embrace and resoundingly Vote through… bring your Members with you!

    ….but NO

    ……just the “Float or Fail” Option ….that’s it ….all that “talent” at The Agents Mutual HQ – and here we are “Float or Fail”.

    Let’s put aside all the “issues” ….CEO/BOARD Millionaire Reward Packages, whether this was the plan from Day 1, the lacklustre AM Management Performance, the “it was the other estate agents who didn’t join that were at fault”, it was The Duopoly at fault, the “legal action”……and on, and on…. it goes.

    I wonder if Ian Springett & The Board are “Mutual” enough to stop proceedings Now ……go back to the drawing board ….do many of the things that they have neglected, forgotten or chosen not to do …and come back with a New set of proposals/options that the vast majority of Members can resoundingly Vote YES to.

    With the clock running the Vote NO Campaign must carry on with those wishing to Vote NO actually making sure they Vote NO.

    Who knows? …..maybe Ian Springett and The Board will amaze us and make a genuine “Mutual Member U-Turn” before V-Day.

    in the meantime, all those Vote NO Members, who actually want a proposal which they can fully support …..they have NO choice other than to Vote NO …..and yet, they still mostly believe that OTM can succeed …..only if it chooses to actually listen to it’s Membership ….and doing that costs absolutely nothing.

     

     

     

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    1. AgentV

      have a good evening Graeme  😉

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    2. Michael

      Your NO vote will be ignored unless you are a fully paid up member who is obeying the OOP rule. A member in breach of either condition will have their NO vote ignored, it will in effect be deemed a spoiled vote. Clever.

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  26. GPL

    Ian Springett has now responded to my email – posted on PIE last night.

    …..more details to follow

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  27. Fencesitter

    “if everyone had bought this product, it would have been a success…” Pathetic!

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  28. JWVW

    AM Agents must support this proposal – it makes perfectly good sense. Business models change and businesses change. Remember Rightmove saying that lettings listings would be “Free forever”! Zoopla were charging me nearly £900 a month – offering £250 a month now…changing times. So, AM agents, change with the times. We don’t have a great deal to lose other than massively ramping up of Z and RM fees. And forget about snouts in the trough – if you want to see some real eye-watering figures, look at the bosses of Z and RM.

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