Broker coach Rod Santomassimo says while much of the focus of Savills' decision to buy Eastdil Secured is on the global expansion it offers and its $1.1 billion cost, the real test of the deal's success will center on people.
As Savills and Eastdil work to close the acquisition that created a buzz in the industry this week, the firms must focus on the brokers who generate revenue and staff who supports them, said Santomassimo. The founder and owner of Massimo Group, he advises high-level producers, including New York investment sales heavyweight Bob Knakal, and those looking to boost their earning power, especially when change swirls in the industry.
"Like all brokerage mergers, the real question now is talent," he said in an email. "In brokerage, the value walks out the door every night. If Savills keeps the key producers who built Eastdil’s reputation, this could be a very powerful move."
If that does not happen, Santomassimo said, "We may see competitors aggressively recruit those teams. You and I have seen plenty of consolidation plays that ultimately proved to be big mistakes."
He acknowledged that the Savills-Eastdil deal is reminiscent of JLL's acquisition of HFF in 2019 as it involved a large real estate services firm buying an investment sales shop to increase the larger firm's capital markets presence. After the pending deal was announced, HFF CEO Mark Gibson, who became JLL's chief executive for capital markets in the Americas, said approximately 50 key HFF personnel "signed multi-year employment agreements in connection with the transaction."
As for the Savills-Eastdil deal, Santomassimo said, "Right now, while the lines of business are distinctive enough where people should stay, it also gives folks without any golden handcuffs and contracts the stimulus to wonder what else is out there."