B
y Bobby Magnano, Vijay Jesrani, and Sam Franklin

    After years of regulatory changes, financial services mergers and acquisitions (M&A) are poised for a comeback. Over 60% of financial services organizations identify revenue growth through expansion, M&A, and new market penetration as critical objectives over the next five years.

    For institutions considering M&A, equipping their corporate real estate (CRE) function to mobilize quickly before due diligence is crucial. Real estate is the second-largest expense for most financial services companies, making CRE integration a significant factor in M&A outcomes.

    Engaging the CRE team early will help organizations realize more value from a merger or acquisition than they might otherwise. Ideally, a well-rounded CRE team should be established long before a deal is actively considered, with access to data and analytics tools, skills, and expertise to plan post-merger integration.

    Missed opportunities for real estate can lead to costly integration gaps. Leaving CRE out of the M&A process or bringing it in too late can result in wasted millions, underutilized space, and deferred capital projects that become urgent and expensive due to lack of coordination.

    A leading Canadian bank exceeded its merger synergy targets by engaging JLL Consulting early in the planning phase. The bank established a 40% cost-savings target for the CRE team, which was achieved through comprehensive data integration, including cleanup and reporting.

    The CRE team collected and cleansed the acquired bank's real estate portfolio data to develop a clear cost baseline, then merged it with the acquiring bank's portfolio data to create holistic visualizations of the combined CRE portfolio. This enabled the team to review the combined portfolio for opportunities and preliminary synergy strategies.

    By considering CRE impacts early in the transaction, the bank accelerated integration and captured millions in synergy savings and efficiency gains. Results included $24.5 million in total synergy savings, anticipated annual cost savings of nearly 50% for the corporate office portfolio, a 40% reduction in rentable square footage, and a structured program management office.

    Creating the right M&A team requires a proactive, well-rounded CRE team that can align the CRE portfolio with business strategy, implement integration plans, achieve synergy savings, and create long-term value. A real estate advisor can equip the CRE team with skills, technology, and expertise to uncover hidden portfolio risks and value.

    To learn more about leveraging corporate real estate during M&A, download JLL's M&A Guide here.