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March 09, 2017

Why Smaller Boutique Firms Are Choosing Independents

GlobeSt.com

Carrie Rossenfeld

IRVINE, CA-More talent is seeking to be part of a privately held entrepreneurial company like Seattle-based Kidder Mathews, which has recently acquired two Southern California-based firms, CEO Jeff Lyon tells GlobeSt.com.

The most recent acquisition was Costa Mesa, CA-based Alden Management Group, a commercial-property management firm with a large portfolio of office, industrial and retail properties located throughout the greater Southern California market. Alden will be re-branded to Kidder Mathews in the coming weeks, and the Alden staff will be relocating to Kidder Mathews' Irvine, CA office. The firm also finalized a merger on March 1 with L.A.-based Heger Industrial, a brokerage and property-management firm, which Lyon says represented "a great opportunity for both firms to grow."

Andrew Zimbaldi, president and founder of Alden Management Group, will serve as the firm's SVP and will continue to lead property management operations for Kidder Mathews in the Greater L.A. Basin.

We spoke with Lyon about the acquisition of Alden and the merger with Heger and the firm's direction and strategy moving forward.

GlobeSt.com: What does this acquisition of Alden Management Group do for your firm?

Lyon: It continues our long-term West Coast strategy and that of all of our service lines. One of our key strategies is to continue to grow our property management because it produces a recurring income stream and gives stability to a company. The transaction side is all cyclical, contingent revenue. As we've come down to Southern California, Andrew Zimbaldi was introduced to me as a good fit for them. Andy had been around and looking for somebody to partner with that fit culturally with his people. In one of those chance meetings, I met him last fall, and we had a very good introductory meeting. Doing business together gives us a significant foothold down here in Southern California.

Coincidentally, I was working on both the Alden and Hager deals simultaneously, knowing that if we were able to do both of these opportunities, it would give us more square footage in the Southern California marketplace. At the time, we were at about 38 million square feet, and this pushes us to 45 million square feet, which is larger than larger than what we'd been doing in the Northwest. We figured if can get a foothold down here for our common clients down the coast, we can provide services to fit into what we want to do long term, which is to service our clients. With all the consolidation going on in the real estate, we wanted to take advantage of these opportunities.

GlobeSt.com: What do this acquisition and your merger with Heger Industrial indicate about your firm's direction and strategy moving forward?

Lyon: These are tremendous opportunities for us to feel we have a great foundation now in Southern California. Bringing on the Heger group provided us with a great foundation with an industrial base. We would like to identify other business lines' product types and explore our capabilities with office and tenant representation, multifamily investment sales and retail. We will continue to look for talent that wants to be part of a privately held entrepreneurial company. It seems like all of our competitors are publicly traded companies, but, our strategy is to remain independent and privately held.

GlobeSt.com: Do you expect to see similar mergers like these in the industry over the next few years?

Lyon: I think it's interesting that both Alden and Heger were looking at how to continue to compete in the marketplace. You have to have size and scale to support the resources needed today, so with all of the publicly traded companies out there, some great boutique firms are finding themselves in no-man's land, so to speak. They don't want to sell through a publicly traded company, so they come to me at a privately held company. There are some small, nice, independent firms trying to figure out how they fit into the marketplace. I get calls on a regular basis from small firms asking how to get into this marketplace. If they have the right business, a good book of business, then we will look at those. There's a preference to go find a team of market leaders and go from there and recruit around. These mergers kind of happened. When you're active in the marketplace and meet good people, someone will say, "Have you talked to Kidder Mathews?" We will continue to look at opportunities, but we have a nice footprint up and down the coast.

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