Billion-dollar DTZ acquisition to shake up local market: insiders

TPG’s buy may set off poaching; Cassidy Turley, DTZ execs to vie to lead NY office

From left: Peter Hennessy, David Gialanella, Timothy King and DTZ office at 1271 Sixth Avenue in Midtown
From left: Peter Hennessy, David Gialanella, Timothy King and DTZ office at 1271 Sixth Avenue in Midtown

Private-equity firm TPG Capital is set to close on the $1.1 billion acquisition of global brokerage DTZ today, a move insiders said will send major ripples through Manhattan’s commercial market.

The deal, news of which broke in June, is set to close Nov. 5 Australia time, which means it will be be finalized at some time today. DTZ is also in the process of acquiring commercial brokerage Cassidy Turley, in a deal that is slated to close at the end of this year .

As the finish line approaches, the New York-based office of Cassidy Turley, headed by president Peter Hennessy, and the local office of DTZ, headed by David Gialanella, will ramp up conversations about who will lead the new entity in the tri-state area. DTZ’s deal with the cash-rich TPG may also kick off a hiring spree last seen following the recession when Avison Young and JLL made aggressive moves to poach agents from rival firms.

“When deep-pocketed firms go on a talent tear, they may buy a few Babe Ruths, but are just as likely to end up with a few duds,” said Timothy King, a principal with commercial brokerage CPEX Real Estate. “It will cause some short-term disruption in the industry, and make life fun for headhunters.”

Executives from DTZ and Cassidy Turley are already meeting locally to discuss leadership and recruitment, but the conversations are now taking on a new urgency. The merger of Cassidy Turley into DTZ will form a company with revenues of $2.9 billion and more than 28,000 employees, according to a statement from Cassidy Turley. By comparison, CBRE, a 44,000-employee global firm headquartered in New York City, reported 2013 revenues of $7.2 billion.

“We are going to have to get to a size and heft that can compete with CB and JLL,” a broker familiar with discussions at DTZ’s New York offices said, speaking on condition of anonymity because he wasn’t authorized to discuss the deal. “The vision now is wholly different with Brett White,” the broker said, referring to the former CBRE executive who will head up DTZ starting in March.

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White rose through the ranks at CBRE to become president in 2001 and then CEO in 2005, until he resigned in late 2012. He managed scores of acquisitions while at CBRE that grew the company into a global powerhouse, such as Insignia/ESG in 2003 and Trammell Crow in 2006. Some players see these acquisitions as models for the potential growth of DTZ.

White, who U.S. Securities and Exchange documents show is under a noncompete clause until March 4, 2015, with CBRE, is trying to fly under the radar even as DTZ makes bold moves. These include the plans to acquire Cassidy Turley as well as reportedly being among a small group of potential bidders for mid-sized investment sales powerhouse Massey Knakal Realty Services.

White “sees how accretive acquisitions can be,” another source close to the deal said. He referred to White as “the wizard behind the curtain.”

Adding to the mix is industry speculation that former CBRE Tri-State CEO Mitch Rudin could play a role at the growing DTZ.

While some saw this as a good time to grow a commercial real estate brokerage with the market rising, others said that made it a bad time, because everything is more expensive.

“I think it’s the worst possible time to get into this business because it is a hot market now and brokers are making a lot of money. You have to pay a lot of more for brokers to sign them up,” said James Wacht, president of Lee & Associates NYC, which was actively hiring as the region came out of the recession.