Tom Acitelli Oct. 26, 2009, 5:25 p.m.
The Commercial Observer: Tell me about how business is going since the acquisition.
Mr. Jaccom: Well, we just finished at the end of the year probably one of the biggest deals since ESG Insignia did their thing. It’s been a fantastic deal. They’ve been great partners. I mean, they’ve been partners in the sense that they’re with you in good and bad times, which is great. They’ve done everything they said they were going to do. If it wasn’t FirstService, yes, it probably would’ve been somebody else. We were negotiating with two or three at the time. The reason we got turned on to them is because we were able to retain ownership. They buy what I call management.
Mr. Freedman: One of the most compelling reasons we did the deal is, as an independent regional firm, we were looking at having to make a massive infrastructural spend to be competitive in the marketplace against top bracket firms, and we realized that we needed a strategic partner with capital. The model is the Peter Drucker model. It’s a reverse merger; they’re buying the management of these firms, but then they’re aligning our interest with theirs, with us retaining a 35 percent interest in the company. Without alignment of interests, we’re employees, and we think like employees. We’re partners now, and that’s how we think. Our balls are on the line. At the end of the day, this business is in large measure about being pumped, and knowing you can compete, and now you’re not taking in batting practice with these guys—you’re in game conditions. And that’s how you build a championship team.
Did the financial collapse, which happened shortly after the deal was finalized, put a wrench in business plans?
Mr. Jaccom: This is an 85-year-old family business—and here we did this great deal and we have this great partner now and we’re all revved up and we have a whole plan laid out and then the brakes. When you needed dollars to do things, you went back to the family, and the family was always very accommodating—not that our new group isn’t accommodating, but it wasn’t a process. What we realized is that we had to cut our budget, clean the place up a little bit, make it lean and mean for the simple reason that nobody knew what was ahead of us. Nobody had a crystal ball.
We looked at ourselves and said, this gives us time internally to build our consulting group, to get more acclimated to the new group. There are so many different divisions, so many different companies. They own a project management company, an evaluation company, a hospitality company and a hotel division.
How exactly does one get acclimated to a new group on such a gigantic level?
Mr. Jaccom: Me and Bob did a road trip.
A road trip?
Mr. Jaccom: What we said was: We can get on the phone and we can introduce ourselves to people. The problem there is, there’s no chemistry. There’s no eye contact. So we felt like we needed to bounce around. So we went up to Boston and Seattle and Canada. We went up there and we matched certain senior people on our end with their end, and then we started letting them talk. We then went to San Francisco …
You guy’s didn’t actually drive, did you?
Mr. Jaccom: Nooo!
Mr. Freedman: But it should be noted that when we arrived in San Francisco, the bellman came to collect our bags and he said, ‘What room are you gentlemen in?’ And we said, ‘Now, I just want to go on record, we have separate rooms. We’re close but not that close.’
You’ve been hiring very aggressively?
Mr. Jaccom: We had to take the cart in front of the horse. We hired economists, financial people, research people, graphics people, writers and lawyers, and we added 36 consultants that service our New Jersey, Connecticut and Westchester offices. The concept was that the brokers would start working more with the consultants, and we mandated that the brokers must use the consultants. It’s not to take money from their pocket, but so there would be continuity. Also, it gave the brokers the ability to go out and mine the business and develop more relationships.
Tell me about the Olympic Tower deal, in which the National Basketball Association renewed a 153,405-square-foot, 10-year lease at its longtime headquarters in June?
Mr. Jaccom: We had this account for many years. We didn’t represent Olympic Tower Associates on their retail, just the office. Bob and myself got involved. What we did is, we made sure when the client came in, we made sure that the client realized they were going to get senior management, senior control and that we give them the advice. What happened from that, we started representing their other situations. But Bob acted more in a consultant capacity to understand their entire situation.
The NBA wasn’t actually going to leave their longtime office space, was it?
Mr. Jaccom: They were looking.
Mr. Freedman: They were actively looking.
Mr. Jaccom: Newmark was actively doing what they were supposed to do. Newmark was out there shopping the deal aggressively, and, yes, at all times we could’ve lost the deal. Honestly, they were looking everywhere. Anywhere, from buildings on the West Side to near Madison Square Garden.
Mr. Freedman: Remember, they have a postproduction facility in Secaucus. I mean, this is a big business, the NBA. But would they relocate their corporate outside of New York City? I suspect no. They’re in the media business. They’re clearly a subset of the entertainment business and their product belongs inside New York City.
You’ve said that FirstService Williams is the No. 4 real estate firm in the United States and even promised it would be No. 3 next year. Would it be fair to call you scrappy?
Mr. Jaccom: Scrappy? Eh, I don’t think that’s the word. There’s another word. I hear where you’re going. I don’t think scrappy’s the word. I would say—because when you’re talking Canada, we’re not scrappy—so I would think what we are is more of a … I’ll come up with the word, but I don’t think scrappy is the word.
Mr. Freedman: I don’t think it’s scrappy. I don’t think it’s feisty, either. I think we’re more combative than we were before. And, frankly, this is a word that’s not the most eloquent word, but we’re competitive. We’re a worthy opponent now.
Mr. Jaccom: Tenacious!
Mr. Freedman: Tenacious is a good word. Yes, tenacious.