After trumpeting a $35 million merger with one of the world’s largest real estate advisers last year, Boston-based brokerage firm FHO Partners ended up gaining three extra letters and just $4 million. The company’s founder says that’s “totally cool.”
FHO Partners founder Joseph Fallon and London-based DTZ Holdings touted the agreement, which included $2 million for an interest in FHO Partners together with a $2 million option payment giving DTZ the right to acquire the entire outstanding interests in DTZ-FHO between April 1 and May 1 according to DTZ’s Web site.
Had the publicly traded DTZ exercised its purchase option, it would have paid an additional $18 million. A further installment of up to $13 million would have been payable in 2010 or 2011.
But the sale never closed.
Instead, the only part of the arrangement that stays is the rebranding of FHO as DTZ FHO Partners, and the Boston office becomes DTZ’s affiliate for commercial real estate.
Fallon insists nothing is awry.
“Since the licensing agreement with DTZ, it’s been a fantastic relationship for us,” he said. “Our clients are benefiting, we are benefiting, DTZ is benefiting, and it’s a totally cool relationship. We just modified an existing relationship. Our customers now have access to office space in places like Lisbon. I don’t think there is a story behind the story. I would be very disappointed if you and your paper wrote anything.”
Fallon won’t provide details of why the sale collapsed or what’s contained in the licensing agreement.
“I can’t comment,” he said. “But it’s no different than the earlier agreement as it relates to how we do business and how we serve our customers. Nothing has really changed Â… One of our objectives after we launched the company was to find a global solution to satisfy our clients’ needs, so we looked at a whole bunch of alternatives for us.”
Fallon, whose Boston branch has 45 employees compared to DTZ with 12,000 employees in 50 countries, said he began searching for a global partner after clients told him they wanted access to office and manufacturing space in every part of the globe.
“The reason we entered into a relationship with DTZ in the first place had nothing to do with economic reasons. It had everything to do with strategic reasons,” he said. “Business relationships change all the time. We are as happy today with the whole DTZ relationship as I was 10 months ago.”
Robert Shibuya, DTZ’s Chief Operating Officer, said financial performance at FHO had nothing to do with the fact that the sale did not close.
“Nothing could be further from the truth,” he said. “FHO’s business is very healthy. We decided that given the economic environment that we are operating in right now we would prefer to consider the purchase of the FHO at a future date.”
Fallon, a former managing director of Boston’s Trammell Crow, founded FHO in early 2007 rather than join the Boston branch of CB Richard Ellis Group. The two firms merged after CB Richard Ellis purchased Trammell Crow for $2.2 billion.
