Peter McCormack, chief executive of Derwent Living
discusses joining the Places for People Group, the challenges and
opportunities of a new partnership, and how a shared vision and
focus were key drivers for both organisations throughout the
News of 'mega mergers' and 'will they/won't they' deals
frequently hit headlines throughout last year. It seemed barely a
week went by without fresh comment and speculation in the trade
press or via Twitter.
This 'merger mania', as one commentator called it, is a
natural reaction to the prevailing economics that underpin a sector
caught in the shifting sands of housing policy. The scars left on
balance sheets from years of austerity have clearly been a
determining factor in many organisations' merger plans. It's no
secret that the four year rent reduction and the accompanying £3.9
billion of lost revenue for housing associations, caused many to
consider whether strength in numbers provided the
The notion that 'bigger is better' is one of those ideas
that bounces around boardrooms when considering a merger. However
it's important to remember that an increase in size alone won't
deliver long-term benefit to organisations, their customers and the
staff providing front line services.
Much more important is how potential partners will fit
together and complement one another's business. Fit - or lack of it
- has been attributed to many of the high profile failures we've
seen in recent times. It demonstrates that a sector which to
outsiders can look conservative and staid, is in fact dynamic and
extremely nuanced. When fundamental differences in approach arise,
it can mean a swift and often very public conclusion to
When Derwent Living took the decision to enter partnership
discussions with Places for People in the summer, organisational
fit was a key part of early conversations. The business had been
looking at potential mergers for two years, and had a clear vision
of what an ideal partner would look like. As talks progressed, it
was clear that there was significant common ground, particularly
around our approaches and where we believed our focus should lie.
As we explored how the two organisations could complement one
another, it struck me just how similar the two businesses were -
albeit on a very different scale. Formed a year apart in the
sixties, both have diversified significantly in the subsequent
decades, looking to bring in additional sources of revenue and
deliver innovative commercial ventures that generate social value.
Operating across a broader spectrum of activity for such a
long time means that there are lots of very skilled people in both
organisations. Having such a wealth of experience and complementary
set of skills is a real boon. It's fair to say that the speed with
which we've been able to integrate with the group is not just down
to how well the two organisations fit, but also thanks to the
dedication of both teams involved. That willingness and enthusiasm
is something we're keen to utilise as we look to enhance our
services in the future.
In terms of that future, there is an eagerness on both
sides to grow our long-standing student accommodation offering,
which today comprises of around 20,000 bed spaces. We're keen to
share our expertise and deliver the last remaining piece of the
'housing jigsaw' for Places for People. Student accommodation is
something we've been involved in since 1997 and an area that's seen
continued growth, despite the economic downturn. It's also a market
populated by increasingly discerning consumers, bringing many
different challenges but also significant opportunities.
For our core business it's a similar story. With Places
for People's help we can add value to what is already a successful
enterprise via greater economies of scale and by accessing
well-established group functions and expertise that will help drive
efficiencies. It helps us to focus on delivering much needed
new affordable housing at a local level and ensuring customer
satisfaction remains high.
The whole local delivery approach is central to the Places
for People placemaking approach, and something that we believe is
absolutely essential. It's a path previously trodden by group
members Castle Rock Edinvar and Cotman Housing Association - and
with significant success. In line with our predecessors,
Derwent Living will keep its brand and local offices, something
that ensures continuity and consistency of service for customers.
This continuity of locally-delivered services was a key priority
for residents when we visited them during a wide-ranging
consultation back in the autumn.
Being able to satisfy that requirement was very important
to the Board and leadership team at Derwent Living. It shows that
there are merger models out there that can add value without having
a detrimental impact on customer experience or sacrificing any of
our core values.
It's just a matter of fit and focus.
This blog was originally published on
24housing on 3 February 2017
03 February 2017