There are evidences that the Nigerian Facilities Management industry is growing. The growth has largely been explicated in line with the growth of other industries and sectors, that prioritise management of soft, hard and critical facilities. From the country’s oil and gas industry to the real estate and construction, players in the FM industry are needed for sustainable maintenance of these facilities towards operational efficiency on the part of the users. These can also be felt in manufacturing, banking, education among others.
As the demand for FM solutions or services grows, in our experience, it appears that some players are finding it difficult to provide sustainable solutions to the users of the facilities and clients. This piece briefly explicates the place of merger and acquisition in driving the needed rapid growth in the Nigerian FM industry. It is not about discussing the strengthens or weaknesses of the players to the point of seeing them as not capable of delivering the solutions or services they are currently offering clients.
In Nigeria, our analyst notes, there is a need to have more of TseboRapid. According to available information, in 2014, “Rapid Facilities Limited approached Tsebo Group in South Africa for a technical partnership which has evolved into a merger with Middle East Africa’s No1 Outsourced Services provider. We are now Tsebo Rapid, committed to becoming Nigeria’s leading Facilities Services provider.”
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In 2003, the Global Property & Facilities International merged with WSP Group Plc, a Global Engineering Consulting, Design, Project Management business that supports the property and construction sectors in over 100 countries of the world. This arrangement ended in 2013, when WSP Group went through global restructuring and divested from providing FM solutions.
Merge and Grow
When the players follow the line of M&A, there are benefits to every stakeholder in the industry. Users and clients have opportunity of enjoying better services from the players. As established in other markets, especially in the United Kingdom, the United States of America and South Africa, M&A has high potential of improving the quality of the services being provided by the players not really stifling innovation or limiting the clients’ choice of service providers. It is an approach that has the benefit of improving knowledge codification and sharing. This is imperative as the industry struggles to have graduates of the first degree, who really studied Facilities Management as a course of study, as early professionals.
As noted earlier, merger and acquisition evolve for many reasons. Merging is imperative in the areas of ensuring improved processes, products/solutions, capabilities and better technology acquisition and usage. It will enable a player to focus on solutions or services it has better strategic resources to deliver sustainably. For instance, the coming together of an emerging player and an established brand will enable adequate knowledge and resources sharing towards value capturing. When a player in Lagos merged with another player that has presence in other states in Nigeria and outside the country merged, the outcome will be an extension of geographic reach.
This is more beneficial to players that offer soft solutions. Acquisition of emerging players that have a competitive advantage in some areas will enable the established ones to deliver superior value to clients and shareholders. Players in the United Kingdom and the United States of America are already capturing value through M&A and growing the industry. Acquisition of Interserve Facilities Management by the Mitie Group is already paying off.
Not Merging and Expire
In our experience, we have witnessed and still seeing the emergence of new players in which majority are proposing solutions and value they could hardly deliver. Not merging has the tendency of ending the life of some players. This would be more among the players that have less or no innovation capacity in the areas of process and people automation for superior solution delivery.
Instead of seeking and winning contracts or projects that would not be delivered in line with the clients’ specifications and expectations, merging could help. To avert unnecessary competition that stifles adequate value capturing, emerging players with superior processes, products and competent employees should be acquired.