After my article last week predicting that Agents’ Mutual would likely seek to raise external capital, including possibly on the public markets, it has been speculated that this information was leaked to me by an insider.
That is absolutely not true. I simply made a relatively obvious assumption as to what was likely next for Agents’ Mutual given the situation they are in which in terms of their original objectives is dire.
It's true to form for Agents’ Mutual to try to silence or attack any dissenters. I have no axe to grind and have simply called it how I and many others see it and so far I appear to have called it pretty well.
Agents’ Mutual have now sent out more details to their members on their intention to float including new contracts and proxy forms for them to vote on the proposals. Before exploring the merits of the offering itself, it is worth asking a simple question. What has changed so much that the founders now believe they need £50 million more than they originally needed and are prepared to break all the original promises they made? How did they get it so wrong?
The proposal itself is even less appealing than I imagined it would be. Not only are larger agents like Savills getting far more shares than others (justified by what they have put in so far but contrary to what was originally stated in terms of equality) but it seems there will also potentially be shares offered to non-members to attract them including virtual agents.
Yes, that’s correct, the new rate card has pricing for virtual agents! So, the idea that its members signed up to as a key defender of high street agency and the promises that OnTheMarket would never accept online agents has now gone too. Listing fees are not going down as promised, but are going up instead - by up to 5% p.a. after the first two years. Oh, and any shares you get you can’t sell for at least five years as part of a lockup agreement.
All of this must sound pretty unattractive to members who signed up for equal rights for all, not for profit, lower fees, defence against online agents, etc. This is an incredible strategic U-turn and betrayal of core principles. Worse still, there is a lot of arm twisting going on here, with superficially much worse terms for agents who don't sign up - although that won't matter if the venture fails. Crucially, the one other portal rule will be ditched, but only if you agree to sign a new five year contract.
So, members are being asked to forget all the original promises made and to support a third portal which is now going to be for profit with escalating fees and promoting online agents alongside them. Surely the last thing the high street agents need is a third portal with whom they are forced to spend money which just increases overall marketing costs? Isn’t this precisely the opposite of why members signed up in the first place?
This looks a lot like a delusional last roll of the dice to me. I imagine this offer will be positioned by Agents’ Mutual as ‘what do you have to lose’? In for a penny, in for pound, as they say. But throwing good money after bad is never a great idea. You have to want to spend more on your marketing, be willing to accept equal promotion of virtual agents, forget all the broken promises and believe it is going to deliver far more in the future than it has in the past. Oh, and that it is still going to be around in five years’ time for you to collect anything on your shares. That is a tall order…
If I were voting, I would certainly vote ‘no’ to this proposal for pragmatic reasons but If I had signed up originally then I would also be voting ‘no’ because I would be standing by my principles and convictions. I suspect that some agents will vote in favour because it's hard to accept it when you have made a mistake and no doubt Agents’ Mutual will do a good job of promising a pot of gold at the end of the rainbow. Finally, I suspect that if you aren’t in favour and don’t vote you will not be counted, so make sure you vote either way!
As a wise man once said “Fool me once shame on you, fool me twice shame on me!”