What if … Purplebricks acquired Countrywide?

Amazon bought Whole Foods: What if Purplebricks acquired Countrywide?

If you’re a longstanding estate agent, your gut reaction to this headline should help you to understand how well you are positioned to deal with what is – if you reflect on it for not-very-long – a relatively sensible move for both parties.

First, the core statistics;

Listed Property Companies

* Purplebricks' IPO was in December 2015

(I’ve included LSL and Foxtons for comparison. This is a sector change, not just a simple company one.)

In summary – Purplebricks is valued by people who care very much about where their money goes at 3.5x Countrywide. People who spend a lot longer than you or I, collectively or on their own, assessing the relative merits of organisations and what their future chances of success look like. Yes, sometimes they’re wrong – but 3.5x wrong?

The scale of valuation-disparity is eye-popping, there is no getting away from it. So now let’s imagine how the notional strength of Purplebricks right now might be solidified into something far more than a flash-in-the-pan, overstretching upstart into the genuine, long-term, single-brand, dominant player in the UK property market.  

What if Purplebricks acquired Countrywide?

For Countrywide’s investors – who, let’s not forget, put an extra £38m into the business less than five months ago explicitly to help turn it into a Purplebricks “digital” competitor – swapping their shares in a company that can’t seem to get up off the canvas for one that is confidently expanding into the US and Australia has to be tempting.

For Purplebricks, reversing their ad-hungry, price-driven model into a more diverse “hybrid” model – essentially converging on what Countrywide has stated its objective to be – makes it more robust and helps it to compete much more easily with perceived strengths of “traditional” estate agents. It will also benefit from the fact that Countrywide right now is doing a lot of the hard work in skinning costs from the business, closing duplication of offices in most locations and making redundancies where it deems them “necessary”.

Which brings us back to your reaction to the headline. As a traditional agent, imagine a Purplebricks-branded estate agency next to you, on every High Street where there used to be a Countrywide office. What’s your reaction?

Whether it’s one of fear, denial – where most I can imagine will want to instinctively go – or resolve, scenario-planning at a strategic level has to happen in your business. Otherwise you will be one of the 20% that is predicted to disappear.

Think about Purplebricks in your local Countrywide office and work out what your product, marketing and sales strategies need to be in that situation. Even if it never happens, your business will be better for you having gone through the thought process and acted on the sensible strategies that will be driven by it.