Facilities managers aren’t typically part of the due diligence team when their organization is preparing for a merger or acquisition. But by working with members of the finance team, facilities leaders can add to the value of the deal by getting information on the other company’s buildings early, the executive of a building management software company says.
“The faster you can make building decisions and start acting on them, the more you can get a return back for the organization,” Eptura Chief Market Officer Meg Swanson said in an interview. “Your real estate costs are your second highest expense after people.”
If a company stands to get 20 buildings from the acquired company, for example, it will be up to the facilities team to integrate the management of those buildings into the acquirer’s systems.
“You’re making sure they have all their leases, what the square footage is they have under management, the occupancy for each of the buildings, what’s in the software tech stack that sits within those buildings — really just getting an overview of every facility that they are about to inherit or merge with,” Swanson said.
If each building has a different access system or work-order ticketing system, for example, there’s a good chance those will need to be consolidated for the acquiring company to operate the buildings most efficiently, she said. “Sometimes decisions will be made to save costs,” she said.
If the acquiring company puts a premium on employee experience, the facilities team can advise on how to balance cost-cutting with measures that are sensitive to the needs of the acquired employees.
“You [risk] losing critical talent,” she said. “They were used to working in a certain way, and now that’s changed. You have to factor in the softer side of the employee’s experience, and that’s what facilities managers have great experience in.”
In the merger of two academic institutions, for example, the handling of occupancy issues can impact the experience of the incoming teaching talent, she said. “If you have tenured professors, what do they have access to?” she said. “What’s in their contracts? So, you’re making sure you’re keeping that same level of offices and equipment that they’re used to.”
The facilities team will also want occupancy data to help keep cross-functioning teams together, Swanson said. “You want to make sure you understand the departments that are colocated because there might have been a lot of efficiency to them,” she said, like “having sales and marketing or your [user experience] team sitting on the same floor.”
Data about the buildings’ footprint, such as from AutoCAD files or digital twins, is probably the most important information to get as early as possible because that gives the facilities team information about the physical space it’s inheriting, she said.
“The floor plans within AutoCAD and any [other] data about the buildings and other assets under management is going to be hugely helpful,” she said.
In BMO Bank’s 2023 acquisition of Bank of the West, for example, the BMO facilities team got access to floor plan drawings from the 50 bank branches it would be acquiring and brought them up to BMO’s standard before integrating them into the facilities management platform BMO was using, according to information from Eptura, which worked on the drawings consolidation.
“You just want to make sure you get the inventory of everything that exists and then the process flow,” Swanson said. “So, if [acquired] employees need to download a new mobile app, or need to book their parking space or need to have smart lockers installed, you need to know what the system was that the employees were used to, and then it’s [a matter of] an internal change-management process as you move those employees.”
Artificial intelligence has been a game-changer in the due diligence process, Swanson said, because of the speed and volume of data it can process. It’s why it makes sense for facilities teams to get involved in the process early, she said.
In the past, the finance team might have said it doesn’t “have the bandwidth or the resources or the time to gather building data,” she said, or “‘We don’t have anybody to analyze it.’ But now you have AI models that are able to consume large amounts of data to do an analysis, so you can bring more and more factors into the equation as you’re doing diligence.”
As a result, things that might not have been included within diligence in the past are now being included, Swanson said.
Because of nondisclosure agreements and other barriers, building data might not be made available until after the close of a deal, she said. Ideally, the data will transfer soon after the deal closes. The alternative is a wait, sometimes for months, to get what’s needed.
“Coach those team members” about what you need and why it’s helpful to get it early, she said. Then “they’re your advocate.”
