Mergers +
Acquisitions

Background

Corporate real estate is one of the top three assets for every company and is often ignored in M&A transactions. Having a defined real estate strategy and determining how to handle the portfolio before, during and after an M&A transaction is critical to a strategic acquisition’s overall success.

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Due Diligence

Overview

After spending almost $3 trillion in 2018, mergers and acquisitions has shown limited signs of slowing down. Understanding how to optimize the integration process throughout the transaction is crucial to creating the most optimized results for the combined. TheActivationGroup can play a pivotal role in supporting organizations through the enormous changes and challenges presented by mergers and acquisitions.

Understanding the monetary and utility values of the real estate, having a clear methodology that aligns the portfolio with internal business objectives and finishing with a strong execution strategy maximizes opportunity and strengthens the overall position of the company now and into the future.

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Goals

The due diligence phase is to understand the objective of the strategic acquisition and develop a proper assessment of the combined real estate portfolio and its operational and investment value to the organization. It’s also vital to manage the transaction while positioning real estate to maximize utilization. Real estate can be an immediate catalyst for liquidity and an immediate source of synergies. Understanding both real estate portfolios allows for both the identification of favorable financial opportunities. The due diligence phase has previously acted as an early warning of issues that can be addressed during negotiations.

Understanding the monetary and utility values of the real estate, having a clear methodology that aligns the portfolio with internal business objectives and finishing with a strong execution strategy maximizes opportunity and strengthens the overall position of the company now and into the future.

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Recommendations

TheActivationGroup often creates an evaluation matrix, ranking each of the properties on such factors as location, efficiency, utilization, access, availability of skilled work force, and operating expenses. Next, we compare estimated market values to book values to determine potential gains and losses of integrating the portfolios. Objective evaluation standards will help to kick-start the process of determining which facilities may be expendable and which will be important going forward, and get everyone involved on the same page to create value.

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Align Assets

Placing the combined real estate assets on the same level as other assets allows companies to see the hidden economic value of their combined holdings. TheActivationGroup identifies values and opportunities, quantifies potential risks, and creates summaries of properties for further analysis alongside internal decision makers. This external analysis has always provided an accurate assessment of the current portfolios, and identify favorable lease situations, undervalued assets and current asset utilization throughout the transaction period.

Our Principles

NKF’s management professionals are nimble in crafting solutions tailored to the company’s visions. Listening to your specific needs and business objectives, coupled with our real estate management expertise, we will design a delivery structure that effectively meets those requirements. Savings and synergies do not stop just after a transaction is closed and business units are changed. The Activation Group assists in the maximization of real estate value from recent strategic M&A activity.

Core
Asset Strategy

Real estate is oftentimes the second largest expense facing a corporate income statement. Only second to labor, it moves the bottom lines of thousands of domestic and foreign companies. An aggressive spend reduction program can lead to tens of millions of dollars in lower operating expenses.

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Financial Structuring

FASB/IFRS updates have presented millions of dollars worth of opportunities that most companies are not taking advantage of. TheActivationGroup is experienced in restructuring, refinancing and altering lease and ownership of real estate assets.

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