Jones Lang LaSalle fast-tracked its recent merger with Dallas-based Staubach, announcing the $600 million deal on June 16 and closing only 26 days later on July 11. Integrating the tenant representation giant and its 1,000 brokers into the Jones Lang model is no easy fete, so we caught up with Bill Krouch, CEO of North American Markets for Chicago-based Jones Lang LaSalle, to find out where it stands.
NREI: You’re now a few weeks into this, so what have you found?
Krouch: We’ve done a lot over the last several years to leverage the knowledge we learned from previous mergers, like with Spaulding & Slye. One of the things we found is you have to appoint integration teams that pull resources from both sides of the ledger and focus them on the areas you have to integrate. You also start that process well in advance of when you’re going to close, so that when you close, you’re really in an execution mode.
We’ve talked to them off and on through the years, but seriously in earnest at the beginning of this year. With Staubach, we had three months to do due diligence and the integration team worked in parallel. We actually started integration discussions at the end of the first quarter of this year.
NREI: Who is on your integration team?
Krouch: Myself, Peter Roberts [CEO, Americas], Bill Thummel [COO, Americas], Greg O’Brien [Staubach CEO] and John Gates [Staubach president]. That group of senior leaders has helped shape a lot of this stuff.
NREI: A lot is made of culture in mergers, but what about the space occupancy factor?
Krouch: One of the biggest challenges is occupancy, and that falls under Chuck Kelly, our senior vice president of operations. His singular focus is integrating multiple offices in single markets.
The whole point is you want all of this to be seamless — you don’t want it to affect the brokers or do anything that disrupts the business model. You also really want everyone pulling in the same direction. You want the two groups working as one group as soon as you possibly can.
Each market has a different strategy, so that’s 25 to 30 different occupancy strategies as you pull these offices together. That is a fairly sizeable task.
NREI: Earlier this year, Staubach signed to be the lead tenant in a new office building under construction in Dallas’ Preston Center, while Jones Lang LaSalle has a big office in the Galleria area. Recently Roger Staubach said the merger would have no impact on that decision. What’s happening there?
Krouch: That’s right. You want to manage the expense that it takes to do all that, but the business imperative is the sooner we get people sitting together, working together, teaming, partnering, collaborating, the faster we’re going to drive an integrated business model.
NREI: You are using the phrases “Legacy Jones Lang” and “Legacy Staubach” a lot these days in referring to both organizations. What is the genesis of that?
Krouch: Before the merger you’re two different companies, but after you close, you’re one company. As opposed to saying ‘us vs. them’, that’s meant to be respectful and agnostic to the fact that there are just different ways of doing things.
When we did this we knew at the end of the day we do some great things and they do some great things, and what we need to do is go into this thing with an open mind and take the best of both in everything we do.
We still need a little bit of time to figure out what the best of both is and how we bring the best of both together because that’s how you actually elevate the platform versus saying this is the way we do it.
NREI: The Staubach name is going away, so how is that working out?
Krouch: This was a collaborative process. We talked about it. We also engaged outside branding expertise on that. Make no mistake the Staubach name has tremendous equity. Roger [Staubach] built a great company and the value system associated with the brand is important.
There is the Jones Lang LaSalle brand, which is much more global and has a lot more applicability. It’s very hard for people to be walking around with two different business cards.
So the strategy quickly becomes what’s right for the business long term. After reviewing all the pros and cons given the global brand and what we were envisioning to become, collectively we felt the Jones Lang LaSalle brand was right.
So then you have to manage in transition. We will continue to celebrate the Staubach history, the Staubach name even if it’s not a brand, and spend time and energy in our marketing campaigns to take advantage of all the brand equity that is there. And transition that equity into the Jones Lang LaSalle brand.
NREI: Jones Lang LaSalle rolled out a new global brand in April, so how does that fit with this merger?
Krouch: First there was great cultural compatibility with Staubach. Then on the strategic side, from their vantage point, they were mostly tenant rep in the U.S., and yet they were seeing more of their clients becoming global and going global. And, they didn’t have a facilities management capability, and today the big corporate users are looking for a holistic real estate solution.
They were going to have to do that by partnering with DTZ or partnering with someone else. So their ability to get all of that under one umbrella was a great thing. Now the Staubach brokers can go to their clients and sell the benefits of Jones Lang LaSalle all over the world, with all of the services.
The net of it is, what is the best brand to operate under, and the collective wisdom from both sides and branding experts was Jones Lang LaSalle.
NREI: Where is the greatest overlap in offices and need to concentrate resources to work through space-lease agreements?
Krouch: Our view is that it is all 100% additive, it’s all accretive. Our goal was not about blanket market coverage it was about being the best. So even in markets where you have lots of concentration, like Washington, D.C. and Chicago, we see it as additive. We’re just growing our competitive position. We don’t view it as a big issue for our brokers.
We really think we can win more business together. Yes, there were many competitive positions in a lot of markets, but we think the combination of the two is going to accelerate growth rather than have situations where we have market overlap.
NREI: How much will the lease terminations cost JLL?
Krouch: We’ve gone through what we think it will cost to do the integration across each of the markets. Our total integration budget is $25 million, but obviously we will sublease as much of the space as we can.
NREI: What kinds of training programs are in place?
Krouch: We are running a series of what we call “workshops,” where everyone comes together to learn the breadth and depth of JLL’s services, how we sell to the market, leveraging the best, and what is our go-to-market message. We have cross-functional groups working together.Getting everyone to work together creates a lot of buy-in and people get excited about it and see that they’re getting the best of both. Over the next 60-90 days we want to come out being crisp and tight in communicating to the marketplace, not operating in silos but in an integrated fashion.