It is even reported that Ian Springett, Agents' Mutual chief executive, could pick up shares worth £20m. Is this what members want?
Estate Agent Today has again assembled its Panel of experts. Each has a strident and considered view on whether Agents’ Mutual will succeed; unsurprisingly, they do not agree with each other and so reflect the debate going on within the industry.
Thanks to them for contributing their thoughts and thanks once again to you for reading - and please feel free to add your own comments too.
Ian Wilson, chief executive officer of the Property Franchise Group:
“In my opinion the IPO is unlikely to succeed. It costs around £1 million to float, and abort costs are probably £500k so OTM members need to know that this is quite a high stakes poker game.”
“It’s true that there is a lot of money in the city looking for a good home but the OTM story is not compelling. Within our group we have substantial numbers of franchisees who once free from the ‘one other portal’ rule will return to Zoopla.”
“Beyond that, once free from their obligation to pay fees to OTM they will stop. The only investment story which OTM can run with is that over time, it can catch Zoopla and extract the same level of charges from customers.”
Mal McCallion, startup expert and high growth business specialist at Growtion:
“75% is a big number. For Agents’ Mutual to convince over 2,000 of its 2,700 independent-business-minded shareholders to demutualise – going against everything that they originally signed up for – is a huge ask. Can Ian Springett pull it off?”
“He’s done it before. I worked with Ian from Primelocation’s pre-launch in 2000 to its sale to DMGT in 2005. His strategy has been vindicated by the recent court case and he’s putting himself up for a hammering from his members at the upcoming meetings, which takes some guts.”
“I suspect that the vast majority of agents, faced with starting afresh with a new board and chief executive at an irrevocably-weakened Agents’ Mutual (because I haven’t seen a Plan B if this float idea fails) or backing the IPO, will choose the latter.”
“How many agents in this climate, with multiple threats from onliners to corporates, wouldn’t roll the dice, create a more powerful competitor to Zoopla and Rightmove whilst at the same time potentially make a tidy profit on their shares?”
“OTM needs a much better and more unique consumer offering, for sure, but this could help create it. I think they might just pull it off…”
Iain White, industry consultant and mentor at Agency Mentors:
“OnTheMarket should have succeeded, but it didn't or hasn't because it was not implemented with a clear achievable set of goals. The one other portal rule has proved to be a millstone and is now unworkable.”
“It’s now very clear to everyone the existing business model has failed on all of its original promises, aims and targets. It isn't the number two portal; its membership is shrinking and a number of members are part of an action group regarding misrepresentation.”
“My biggest concern is they are now in effect trying to solve the portal monopoly by duplicating what they proclaimed to be the anti-Christ a few short years ago."
"The feedback I’ve had from the staunchest supporters suggests a real unease to the real purpose of the proposals.”
“The so-called rebel agents who ditched the OTM and stopped paying the bills many months ago, have heard nothing from OTM until now - some are now receiving backdate invoices and demands to pay up.”
“OTM as a portal might well be defunct but an Agents’ Mutual-style principled network still holds significant interest with the estate agents I talk to. If it could mobilise the industry under a new agenda with clear member benefits and clear standards, collaborating to protect our industry then I would back it to succeed.”
“Who knows? In the future, it could even have its own portal supported by the whole of the industry and achieve the aims we all very much hoped would be achieved by OTM.”
Iain McKenzie, chief executive of The Guild of Property Professionals:
“The decision to seek to be demutualised and subsequently IPO seems to be the only option. In order to compete with the perceived duopoly of Rightmove and Zoopla, OTM needs to gain greater consumer recognition and generate a higher level of leads for its members.”
“If supported by its members, then great - the stock market will dictate the appetite for the product, investment will be made, and OTM customers will get more choice. But what if the members of Agents’ Mutual actually vote against the demutualisation? Could this be used as an opportunity to undermine the offering? OTM needs to concentrate on delivering a return of investment for its members.”
“The reported decision to remove the 'one other portal rule' is irrelevant. With transaction and fee levels dropping, agents are loathe to increase costs unless the product offers unique leads or unique differentiation.”
Anthony Codling, equity analyst at Jefferies International:
“The challenge for Agents’ Mutual is to explain to its members how changing from a mutual to a company listed on the stock market is more beneficial to them. Currently all the owners have a similar objective: to control portal fees and costs. The problem is that once you introduce external investors, they will have a different objective, to make money, and it is difficult square the circle of investors wanting to make money and agents wishing to save money.”
“In a market where the two largest portals combined are spending around £50 million a year on advertising, it’s difficult to see how raising £50 million (before fees and IPO expenses) from investors will be enough for Agents’ Mutual to achieve its objective.”
“In the future it will need to raise subscription rates to either pay for future growth or convince external investors that a further investment would be a profitable one.”
“A non-industry owned monopoly is clearly not desirable. I can therefore see the logic of having two competing profit seeking portals, a bit like Airbus keeping Boeing honest. However, if you asked me to name a third major airplane manufacturer, I would struggle."
“I do believe that there is room for a third portal, but, a portal that is run, controlled and owned by those who share the same goals, a portal ‘by agents for agents’ which was part of the original marketing message of Agents’ Mutual.”
Chris Wood, industry campaigner and managing director of PDQ Estates:
“I was one of those who wished Agents’ Mutual and OnTheMarket well but chose not to become involved; predominantly at the time for commercial reasons but also the one other portal rule.”
“Since then, I have watched its main rival and itself involved in a none-too-friendly war of claim and counter claim culminating in the recent court case. I don’t like bullies or bullying tactics and it seems that OTM may have fallen foul of commercial dirty tricks but, they must also look closer to home at their own decision making.”
“Floatation (if it goes ahead) is, to my mind, another example of a decision that few of its members will ever benefit from. It is sad that no one seems able to break the seeming abuse of the Rightmove monopoly but I don’t believe that OTM will succeed in its aim as a mutual or a PLC and wishing it to be so, will make it no more likely.”
Charlie Wright, founder of the Charter for Independent Estate and Letting Agents (CIELA):
“Three and a half years ago - one year before Agents' Mutual launched - I wrote this article, warning that the whole thing was a money-making scheme for corporate agents. It was read over 6,000 times and many independent agents have since thanked me for a point of view which helped them decide not to join.”
“I am sad, but unsurprised, to see that the corporate founders of OTM have now, shamelessly, at last revealed their true motivations. I cannot conceive of the rationale of any independents who now choose to throw good money after bad with the new commitments being asked of them. Vote no. Cut your losses.”
“Whilst no one can blame the corporate founders for wanting to do a financial damage limitation exercise, I hope that OTM will be the last time that independent agents get seduced by disingenuous schemes launched by corporates, under the guise of saving their fellow agents money on portal fees.”
“In my view, it was a devious scheme to exploit the hopes of vulnerable small agents with the false promise of savings.”