Every deal is unique, but three themes emerge. First, that big is good. The 10 biggest housebuilders build about half of all new homes. And there's now a view that the whole sector would benefit if a couple of market leaders 鈥� Persimmon and Wimpey, say 鈥� could reach the FTSE 100. Hey, it might even persuade analysts to rerate them. Size also matters for contractors and consultants: many PFI projects and 10-year local council partnering deals can be credibly undertaken only by behemoths. Second, major firms face a scarcity of resources, whether it's land, in the case of housebuilders, or skilled staff for consultants and contractors. For further proof of the latter, see this year's salary guide (pages 50-53). And third, some chief executives are desperate for the short-term profit injection that a takeover can provide. Even housebuilders, whose 17% margins are not far short of those reached in the 1988 boom, are jittery about next year's growth.
All this financial flirting doesn't mean every suitor will tie the knot, of course. Historically, most engagements in construction never make it to the altar. Remember McAlpine's row with Bryant in 2000 over who'd be chief executive? Other courtships fizzle out, like Rok and Galliford Try. None of which is necessarily a bad thing. Disasters happen when talks take on a momentum of their own, and bosses become blinded by the thrill of the chase, and the legion of bankers, accountants, lawyers and PRs propelling them forward 鈥� for an hourly rate, naturally. Outside housebuilding, it's devilishly hard to pull off a merger, not least because cultures vary so much. The killer question is: would the combined business be stronger than the sum of parts? Buyer 鈥� and seller 鈥� beware.
Home work for teachers
Education chiefs endeavouring to tackle the crisis driving staff out of inner-city schools did not have to look far. If young medics have flats in hospitals, why not do the same for teachers (see news)? The idea will challenge architects: how best to separate living and learning environments? Or avoid comparisons with barracks? Nor will 鈥渢eacher flats鈥� alone solve the accommodation shortage. As soon as staff in, say, London want to buy a house, they鈥檒l still have to move out of town. Which is why more radical solutions are needed. One, which was mooted by the Treasury鈥檚 Barker Review, is to use cash from a 鈥渨ealth tax鈥� on development to fund cheap homes for key workers 鈥� or subsidise their mortgages.But even if the flats revive memories of grim 1950s schoolhouses, it does illustrate how educationalists are countenancing radical thinking outside the classroom as well as in it.
Postscript
Adrian Barrick, editor
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