Global Chairman & CEO, Colliers International Group Inc.
Jay Hennick - Interview with Amanda Lang from Report on Business Television
Report on Business Television-Amanda Lang interviews Jay S. Hennick, President and CEO of FirstService Corporation.
About Jay Hennick
Jay Hennick, Global Chairman and CEO of Colliers, was inducted into the Canadian Business Hall of Fame in May 2024. In a legacy video and acceptance speech, Hennick reflected on his nearly 50-year career, describing his upbringing in a working-class area north of Toronto and his early entrepreneurship at age 17 supplying lifeguards. He stated that he built an "Empire from essential Services business centered around real estate" by buying well-managed service businesses and working with management teams. Hennick noted that FirstService and Colliers were split to allow shareholders to choose between a "steady growth engine" and a "more transaction driven" business. He attributed the success of both companies to a unique operating culture that is "very entrepreneurial" and difficult to replicate, and expressed hope that increasing recurring revenue streams would attract a better market valuation. In his Hall of Fame speech, Hennick outlined five guiding principles: imagination, education, hard work, dealing with adversity, and luck. He said that luck involves "actively shaping your destiny, taking bold actions and seizing key moments." Hennick also emphasized the importance of cultivating a unique culture aligned with a core purpose and vision, and expressed gratitude for the contributions of partners, business leaders, and over 60,000 employees.
Transcript (19 segments)
I
Interviewer0:06
First service is a Toronto-based property management firm that today added customers to its commercial real estate business. It's going to buy CMN International. Price tag is $88 million. And we're joined now by Jay Hennick. He's president and CEO of First Service. Thanks for being here. What are you getting?
J
Jay Hennick0:23
We are buying a phenomenal brand. The company is CMN International. It carries on business as Collier's International in Canada and operates in 20 other countries around the world. It's the third largest brand. We're very excited about it. Now, one of the questions of course for anybody doing anything with real estate in North America these days is, are we topping out? Does that trickle down into this kind of business, or does it make it a good time to buy into this sort of business? Well, the commercial brokerage business, which is what Collier's International is, is actually going through a bit of a resurgence right now. And CMN itself is very diversified, so there's the benefits of both international as well as North American based brokerage. We think it's at the right great time of the scale and of the schedule.
I
Interviewer1:09
Where does it fit with your portfolio of companies? Because you have a pretty diversified group. Where will CMN fit in?
J
Jay Hennick1:15
Well, we have four different service lines. CMN will be the fifth service line. We're the leading player in residential property management. We own a family of well-known franchise brands. We're a significant player in the integrated security business. So we really do surround commercial properties and residential properties. CMN, Collier's International, is one of the leading commercial brokerage operations but also has a very significant property management business, and we see that as an area that we can help them grow in.
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Interviewer1:45
Now, there was a period when you sort of publicly said we're going to lay off acquisitions. You made a big one, I think in 2001, that you were going to take some time with. Does this market return to a big acquisition phase, or is this a kind of a one-off?
J
Jay Hennick2:00
Well, this is our biggest acquisition to date, so the answer is yes. But we also see great opportunities within this sector. It's a highly fragmented business. There's lots of opportunities to add brokerage operations, to add commercial property management operations. So this really opens up a whole new engine for growth for us.
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Interviewer2:18
What are some of the downsides of the brokerage business? Because it strikes me as one that must be sort of thin margins, but am I wrong about that?
J
Jay Hennick2:26
Well, it is a thin margin business. I think you'd probably say that most of our service lines are thin margin. However, the brokerage business, different than many of our other service lines, is a little bit more cyclical. It rises and falls with the changes in real estate. It's impacted by interest rates. But again, the diversification of this particular company gives us the advantage of being able to ebb and flow with the changes in the market.
I
Interviewer2:52
What is this going to do for your numbers? Do you change your forecast at all?
J
Jay Hennick2:56
Well, we're actually in a blackout period right now because our numbers are out, not next week but the week following. But we have announced the impact of this transaction for the balance of the year, which should be somewhere between a dollar and... actually between a penny and four cents a share for the full year on a pro forma basis, about 22 cents a share. So very accretive, immediately accretive and immediately okay.
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Interviewer3:17
Okay, so that's a good sign. Any integration issues that you see?
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Jay Hennick3:20
No, it's a great management team. They run a great business. We're excited to be backing them and letting them do their thing and maybe augmenting it a little bit with some of our expertise and acquisitions and also some of our capital.
I
Interviewer3:33
Now when you look across your portfolio of companies and the diverse geographies you cover, where's the opportunity biggest right now? Is this it?
J
Jay Hennick3:40
No, I think we've got a great opportunity still in residential property management. We're growing very quickly there. We're excited about things that are happening in our franchise area as well. So being a diversified service company is just that – diversified. So you have the advantage of having revenue pockets in four different areas, now going to be five different areas, and five different areas to grow as well.
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Interviewer4:05
Now you founded this company as such, you have a majority voting stake in it, therefore dual class listing as of today, SV after your ticker. Good thing or bad thing for you?
J
Jay Hennick4:15
Well, I'm not sure it matters really to us. I'm not sure the TSX did the right thing in differentiating single vote companies and multiple voting share companies. But that's the way it is, and I don't think it's going to make an impact on us.
I
Interviewer4:31
Now do you feel like this is something that they focus on overly in Canada versus what they do in the US? Because you're also NASDAQ listed.
J
Jay Hennick4:39
Yeah, I think so. I think that in the US it's less of an issue than it has been in Canada lately, particularly with the corporate governance issues. But we've been public a long time. We have a great track record, and I think that's what investors really look for.
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Interviewer4:52
All right, we gotta leave it there. Appreciate your time today. Thank you. Jay Hennick is president and CEO of First Service. And that's it for The Wrap today. We'll do it again tomorrow. Stay tuned now for Squeeze Play. Kevin O'Leary standing by with us. We've got the CEO of Nexon, plus the ad agency that thought it would win Molson's business by offering up an ad that they didn't ask for. We're talking to them. See you then.