A big payday for CBRE | FacilitySource

Bill Hayden takes next step under public company ownership

Who: FacilitySource

What: CBRE acquires facilities management company for $290 million

Why it matters: Already hitting a 50 percent growth rate, year over year, FacilitySource is looking to expand in Columbus and Phoenix with the $14 billion company behind it.

 

Bill Hayden has FacilitySource poised for a bright future. First, he helped turn a modest call center-based business into a leader in technology and data-driven facility management services for some of the country’s biggest retailers, such as Target, Macy’s, Starbucks and The Home Depot.

Now, that journey will get more fuel in the tank under the ownership of CBRE, which closed its acquisition of FacilitySource on June 12. CBRE is the world’s largest commercial real estate services and investment firm.

Hayden, who is CEO, was upfront with his team so the deal wasn’t a surprise. They knew CBRE was on the list of potential strategic buyers, which could facilitate FacilitySource’s exit from PE firm Warburg Pincus.

Even so, Hayden held three town halls in Columbus and two in Phoenix as the deal was announced to reassure his 600 employees. Columbus is the operations center, Phoenix has the procurement and sourcing teams, and both locations include call centers.

He asked them to judge him by his actions because he is confident there will be growth ahead.

“I stood up and said, ‘This is not a synergistic acquisition. This is something that CBRE is buying because it doesn’t exist inside their organization. So, if you’ve been through another M&A and you’re worried about headcount reduction, that’s not this. If anything, we’re going to add and we’re going to grow. We’re going to take more space in Columbus. We’re going to take more space in Phoenix,’” he says.

 



Realizing the vision

Hayden got his first taste of startups in the dot-com era, but landed in Columbus in 2006 when FacilitySource was a call center.

“I came in early. Limited Brands was their only client,” he says. “And at the time, we were developing our own software product, really with them in the passenger seat, so that when we got it fully built, they committed to moving over.”

Hayden says the company wouldn’t be where it is now without the Limited, which is still a major client today as L Brands. In addition, FacilitySource went after companies, which were mostly mall-based retail, that looked and felt like the Limited with clients two, three and four.

Hayden has learned the importance of finding clients that match your vision for the future.

“You get a lot of opportunities coming in and it’s not really about what you do, it’s about what you say no to. Because you can go do 100 things, but you won’t do them well and you won’t do them deep,” he says.

The first investors were well-capitalized individuals, and because the company was cash flow positive early, it didn’t need additional funds. That changed in 2012.

“We recognized that we needed to pivot our business model, and we needed some significant investment in order to go build a platform to where we thought the market was going to go,” Hayden says.

Around 2010, FacilitySource was getting larger than its clients. It managed 10,000 locations or more, while the average client had 1,000. To take the next step, the company needed to build an Angie’s List-type network for sourcing and procurement.

That meant selling a majority of shares to Warburg Pincus and re-rolling some of the purchase price into the capitalization table, so they had equity in the ongoing business, Hayden says.

“Then they invested over the next few years to build some enhancements in our technology and in our people and processes so that we could build out this supplier network, which was really the big part of why we were successful going into the most recent exit,” he says.

 

Another step forward

Warburg Pincus, a leadership-driven PE firm, helped FacilitySource improve.

Hayden says he’s the type of leader who falls more into “ready, fire, aim” than “measure three times.” So, he surrounds himself with people who are thoughtful, while making sure he stays patient with his hiring, even in the midst of rapid growth.

“All these worries that you have and these anxieties that keep you up at night, if you have a team that’s an A team, they’re taking care of all that,” he says.

While Warburg Pincus didn’t have a set time for its exit, a little over a year ago, CBRE approached FacilitySource about setting up a strategic partnership. CBRE had been looking for about 18 months to find companies to help it manage its service providers, and it was open to either a partnership or acquisition.

As the two companies got to know each other better, Hayden says, the conversation flipped to “Would you be willing to sell? This makes more sense for us to acquire.”

“We went under an exclusivity (agreement) in the first quarter. That was 90 (days) with another 30 days on top, so it happened pretty quickly, once they got to a number,” he says.

Warburg Pincus ended up with a 4x return on its investment in a little over five years, while FacilitySource is positioned to take its next step forward.

“This was a very good acquisition for people for growth within FacilitySource, because they’re looking to pour more fuel in the tank — invest more in our technology, which at the tail end of private equity engagement, they’re pulling back on some of those things,” Hayden says.

FacilitySource will have to get used to the quarterly focus of a publicly traded company, but Hayden says CBRE, in general, takes a long-term view.

“On the quarterly earnings call, after the deal was announced, the CEO was talking about FacilitySource. There was a lot of questions from the analysts about FacilitySource, so it’s a different a type of pressure. But a lot more resources — it’s a $14 billion company, deep resources at our disposal,” he says. “I’m still putting the map together of who does what, and how to operate within their organization. I’m sure I’ll learn a lot.”

How to reach: CBRE | FacilitySource, www.facilitysource.com