Foxtons CEO Nic Budden says he always had a focus on the lettings part of the D&G business and that is why the sales operation has been sold off.
The deal isn’t set in stone though – Foxtons’ shareholders still need to approve the deal at a meeting set for 10th February.
Budden has made the comments during an interview with The Negotiator following the news that D&G’s sales division has been sold for a few pounds to its CEO James Evans, who has also been given nearly £3.7 million in cash to tide him over until it attains profitability.
“We see this as a fairly straightforward thing,” he says.
One leading industry acquisitions expert has told us that this represents an ‘extraordinarily good deal’ for Evans who, released from the distractions and costs of running the lettings arm, will easily turn the sales business around before the cash pile is spent.
“The purchase was primarily because it’s is a very attractive lettings business that’s already performed very well under our ownership over the past ten months, with the portfolio growing by four per cent and contributing revenues of about £10 million over the past ten months,” says Budden.
“So the decision to concentrate on the lettings operation is designed to release the synergies that we identified at the time of the acquisition [back in March] which involves a disposal of the sales business to the management team and the integration of the lettings business into our scalable infrastructure.
“The sales business has grown too during the current improved market conditions, but it continues to be loss-making like many agency’s sales operations around the UK.
“We have the largest book of landlords in London but the sector as a whole is still a very fragmented industry and service levels and compliance are still a bit patchy out there. So we think tenants and landlords benefit from being with a more professional, higher quality organisation.”
Budden says D&G’s property management teams are already based at Foxtons’ Chiswick HQ while lettings staff will be relocated to the nearest Foxtons branch.
“We genuinely believe it’s a win-win not only for the parties in the transaction but also for our D&G landlords who will now have access to our superior technology platforms and a much larger pool of tenants and applicants.
“We also believe the D&G lettings employees will benefit from wider and better career prospects.”
But Budden also says restrictive covenants written into the proposed sale contract will prevent Evans from employing or soliciting any former lettings staff for up to 12 months or dealing with any D&G landlords for a period of four years. And that assumes he wants to get back into lettings.