Mergers and acquisitions (M&A) remain a powerful strategic tool for growth in the real estate industry. However, success often depends on the effective integration of two distinct organizations, each with its own strategy, systems, and operations. Traditional capability models, often used to evaluate potential synergies, can identify complementary skills or strengths but often fall short of revealing the deeper structural and operational complexities that are crucial for seamless integration.
This is where the ICMG Enterprise Anatomy Model, guided by the concept of “One Enterprise, One Anatomy,” offers a transformative approach. Much like the understanding of human anatomy brought clarity and effectiveness to healthcare, the anatomy model brings a holistic view that’s essential for successful real estate M&A. Let’s dive into how this approach addresses the hidden risks and challenges that can derail even the most promising M&A ventures.
Traditional Capability Models: Why They Fall Short in M&A
In M&A, capability models typically focus on surface-level synergies, such as complementary skill sets or shared objectives, and while helpful, they’re often misleadingly incomplete. Capability models create the impression of a complete integration framework, but they lack depth in addressing the complex, interconnected elements that impact the entire organization. As a result, they risk giving only a partial view, with potentially high costs associated with updating and maintaining them for relevance beyond the first 6-12 months.
For real estate firms, which manage highly integrated systems across property management, leasing, and tenant engagement, relying solely on capability models can result in fragmented integration efforts that overlook deeper alignment across all operational facets.
Case Study 1: Brookfield Property Partners and GGP Inc.
In 2018, Brookfield Property Partners acquired GGP Inc., a major mall operator in the United States, in a $15 billion deal aimed at combining Brookfield’s diversified real estate portfolio with GGP’s expertise in retail properties.