Business advisory firm FTI Consulting Inc. is buying real estate and finance consulting firm the Schonbraun McCann Group for $125 million, a move FTI expects will make it a leading player among real estate consultants at a time when a global credit crisis is creating demand for such services, FTI said yesterday.
FTI, based in Baltimore, said it plans to close on the deal today for $100 million in cash and about $25 million in restricted FTI stock. FTI said it expects to pay an additional amount if earnings exceed certain targets over the next five years.
SMG, with headquarters in New York and offices in New Jersey and Florida, has advised on large, complex real estate transactions in the past few years for clients including SL Green, on its $6 billion acquisition of Reckson Associates Realty Corp.; Beacon Capital Partners, on its $6.4 billion acquisition of office properties in Seattle and the District of Columbia; Broadway Partners, on its $4.7 billion acquisition of 14 office properties; and Gale International, on its $30 billion master development of Songdo City, South Korea, as well as on many REIT initial public offerings. In the past two years alone, SMG worked on transactions valued at more than $100 billion.
FTI representatives were unavailable for comment late yesterday.
In the announcement, Jack Dunn, FTI's president and chief executive said that SMG will help FTI become more competitive by expanding its real estate and real estate finance practice. FTI's core practices include corporate finance, economic consulting, forensic and litigation consulting, strategic communications and technology.
SMG's services should be more sought-after than ever at a time when liquidity in the global financial system is creating stress in the real estate market and driving demand for services such as conflict resolution, restructuring and strategic counseling, Dunn said in a news release.
SMG's founder, managing partner Bruce Schonbraun, will join FTI as a senior managing director and become group leader of FTI's real estate practice, the company said. Some 170 SMG professionals will join FTI, including 11 who will become senior managing directors. SMG will operate as FTI's real estate division within the corporate finance sector but will continue to operate under the SMG name.
The acquisition will place SMG in an "organization that is in virtually every major business center around the world," Schonbraun said in the news release. "FTI's global reach will help us better serve our international clients, notably the so-called 'sovereign funds' that are seeking real estate opportunities in the U.S."
Shares of FTI rose $1.45 yesterday to close at $71.04.