As a Board member, you chose your property management partner based on carefully weighed and considered variables: the services that matter to your residents, the training, and resources they provide to your staff, the company culture, their communication and technology skills, and their management fee. You made that decision with the best interests of your building and owners in mind.
Then your property management partner is acquired by a larger, public property management company. Now what?
The reality of mergers and acquisitions can be harsh. Your current management partner will tell you that things won’t change, your staff won’t change, your services won’t change, your day-to-day operations won’t change, and your leadership won’t change. That sounds great! But the truth is a lot more shades of gray. You signed on with one company and now you’re being managed by a different one that you didn’t choose and even might have deliberately passed over. What is likely to happen?
First of all, your service level WILL be disrupted. It’s inevitable. Large public companies aren’t known for their attention to smaller properties. Your building staff and management team will have to learn new accounting, budgeting, communication, and operational systems. That takes time, time they usually spend serving your Board and residents. Everything has a learning curve, and even the best staff members will need time to get up to speed with the way things are done by the new company. Employee turnover is a given during a merger or acquisition, further affecting your levels of service.
Your back office staff, such as tech support, logistics, and accounting, will be affected too. One of the first things that happens in a merger and acquisition situation is elimination of redundancies, meaning layoffs. The large public company that just bought your management partner has its own IT department, marketing team, accounting staff, and account managers. The people who know your building’s unique features and quirks may be kept on, or they may be let go and their work absorbed by folks at the larger company. As these decisions are made, those people will face additional stress and uncertainty, which will likely affect their ability to serve your building as before.
How will the cultures of your current partner and the large public company that acquired them mesh? That’s another thing your current building staff and management team is going to have to spend time and energy adjusting to. Employees you have valued relationships with may not feel comfortable and decide to look for opportunities elsewhere.
Your Board is going to have to adjust as well. Your current company may be small, warm, and friendly, with staff empowered to respond personally and quickly. But the company that bought them is bigger, more corporate, publicly traded, more driven by processes and procedure than by individual relationships. In a larger public company, your building is more likely to become “just a number on a spreadsheet.”
Your days of being able to reach executive leadership directly are over. You and your fellow Board members might not get your questions answered as quickly as you’re accustomed to, or as personally as you’re used to. There might be tradeoffs to that in terms of consistency but, again, there’s a learning curve, onboarding process, and time of adjustment to new culture that takes time away from your staff serving your Board and building the way you’re accustomed to.
Is the price of your management contract going to change? Will it be cancelled? You’ll be told no. But a larger public company with more layers of bureaucracy is likely to cost you more and your contract likely has a cancellation clause in it. They can “fire you” as a client if your business doesn’t bring them enough revenue. You might be able to save some money through the buying power of a larger organization, but other costs for marketing, advertising, administration, software development, and layers of management are going to cost more money. You’ll face possible “hidden fees” or unexpected ones, including a COVID-19 surcharge. You may not see a change immediately but be prepared for sticker shock down the line.
Be prepared for leadership confusion and potential conflict as companies merge. That culture element? It flows from the top. Your building staff may not know who to look to for leadership and direction. Expect some bumps as management communications roll out and everyone adjusts to the changes. Make sure your management company is clear to your Board about who is in charge.
If there’s going to be a shared leadership structure between your current company and their new partner, ask who’s going to be running the show and how the transition will occur. At what point will logos, uniforms, signage, suppliers, etc. change in your building? Unfortunately, it may be incumbent on you as Board members to demand information about clarity during the transition. Your management team may not be in the loop as to what upper management is doing and you may need to push for that info.
Bottom line: if your management partner is acquired by a larger, publicly traded, property management company, you need to be aware of potential issues and prepare your Board for them. Things may go perfectly smoothly, but it’s better to be aware of what can go wrong so that you can prepare.
