Bruce Mosler, outgoing Cushman & Wakefield CEOBy any measure, 2009 was a tough year for commercial services firm Cushman & Wakefield. It suffered through the economic crisis with even greater losses for the first nine months of the year than two of its larger international rivals, CB Richard Ellis and Jones Lang LaSalle.
While CBRE is struggling more in New York (see “CBRE’s New York slide”), internationally, Cushman saw revenues down 25 percent, while operating expenses fell by just 22 percent, hurting the bottom line.
Compounding matters, just two weeks after the third quarter ended, company president and CEO Bruce Mosler announced he would step down from the top spot and this month start “transitioning” into a position as a board co-chairman alongside John Cushman III. (He will remain as CEO until a successor is named.)
To find a successor, privately held Cushman & Wakefield, owned by the publicly traded Italian company Exor, made the unusual decision to look both outside and inside the industry for a replacement, hiring executive search firm Spencer Stuart to bring in candidates.
Mosler told The Real Deal he had always planned to stay in the CEO post for only five years after taking over in January 2005, and that the change was unrelated to company finances. Yet a senior broker at the firm said Exor, which bought Cushman in 2007, was “not terribly impressed” with his tenure.
“My move to chairman of the board has nothing to do with [financial] results,” Mosler said. “When you look at the costs we have taken out of the system, I think [Exor is] pleased with the fact that we have restructured the business.”
He added, “my goal was to take us through the worst, to stabilize the business, which we will. We are the only firm today on a global business scale that has very little permanent debt.”
The economic downturn has left no firm unscathed.
Two of Cushman’s major global competitors, CBRE (which is about three times as large) and Jones Lang (which is about twice as big), have also struggled. In the first nine months of the year, CBRE lost $30 million, and Jones Lang lost $56 million.
Yet the smaller Cushman posted a loss of $82 million globally in the same period.
And in the third quarter, CBRE earned $12 million, and Jones Lang $20 million. While an analysis of Exor’s reporting of Cushman quarterly financial information by The Real Deal indicated a $6 million loss for the quarter, the Exor filing showed a 2.1 million euro profit.
Note: Correction appended
Stephen Siegel, chairman of global brokerage for CBRE and a CEO of Cushman in the 1980s, praised Mosler as a hard worker leading a company during a rough period.
“I think he was hamstrung by the economy, etcetera. So maybe he would have liked to do more expansion or mergers or whatever, but I think he did fine,” Siegel said.
He faulted the transition process, though, saying that in general it is preferable to have a successor named before announcing a CEO’s departure.
The search for a new CEO has been tightly controlled. Mosler said the company hoped to have a successor chosen by the end of this quarter.
One industry insider said the decision to look outside the industry was taken in part to give greater credibility to Exor if it tries to spin off the company in an initial public offering four or five years down the line. Mosler said no such thing was being discussed.
“I think that is ludicrous to talk about an IPO today. I wouldn’t be able to comment on the future, but that is not why we are [looking outside the industry],” he said.
When asked whether an IPO was being discussed, he said, “No. I can’t comment, but no.”
Mosler, who will remain at the company under a three-year contract as co-chairman, bringing in business as a salaried and bonused employee, said the search included candidates with investment banking and other banking backgrounds.
Dan Fasulo, managing director of Real Capital Analytics, said looking outside of real estate makes sense as the industry becomes more intertwined with financial services.
“I think it is a very prudent move. Commercial property is moving more and more closely toward Wall Street despite the downturn,” Fasulo said.
Some questioned picking an outsider, despite the positive experience of Jones Lang LaSalle, which has been run for the past five years by Colin Dyer, who had a clothing background before being tapped for the top job in 2004.
Although not a management expert, Lawrence Longua, clinical associate professor at the Schack Institute of Real Estate at New York University, suggested it would be difficult for an outsider to manage brokers.
“It is like herding cats,” he said of brokers. “If you don’t understand the culture, learning the mechanics won’t help.”
For their part, insiders said Mosler would be more valuable to the company as a rainmaker. Mosler himself said he was most suited to bring business to the company.
“This is a desire for me to get back to what I do best,” he said.