One of the biggest business headlines to hit the news recently is the merger of two giants in the fast food business, namely the marriage of Burger King and Tim Hortons. Both are giants in their respective markets. With this merger the company would become the 3rd largest fast food company globally, with over $22 Billion in sales across 18000 outlets in more than 100 countries world-wide. The new company would be headquartered in Canada.
Both Tim Hortons and Burger King have very different corporate cultures and revenue sources. Despite Tim Hortons having only one third of the number of fast food outlets that Burger King has (i.e. approx. 4500 VS approx. 13500), Tim Hortons is expected to generate the lion’s share in revenue by a large margin. Tim Hortons generates the bulk of its revenue through distribution sales as opposed to Burger King’s main revenue sources from franchise royalties and real estate.
Burger King has far more fast food outlets whereas Tim Hortons has an extremely robust and mature distribution warehousing and supply network. A completely different picture from a commercial real estate viewpoint.
The differences in culture and the types of CRE now part of the new company will need to be reflected in a robust, state of the art financial modelling solution and flexible calculation engine. The solution will be required to manage budgeting, planning, valuations, debt, financial modelling as well as providing a platform for the development and running of “what-if” scenarios for all aspects of the CRE part of the business.
A state of the art solution should provide for multi-currency transaction processing, as well as multi-valuation methods to allow for the expected continual growth and geographic spread of this new entity.
Also there will be a need for real-time, 24 hour access by all personnel at all levels involved with CRE acquisitions and management. At the same time, a single repository for all CRE related information with the ability to cope with increases in the scale of operations will be a necessity to survive the big data flood.
We should expect a period of adjustment while all the disparate operations, processes and systems are merged together. Only by making the key decisions at the right times will ensure the success of this merger. One such key decision will be the choice of the appropriate software solution to cope with a greater diversity and complexity within the new entity’s CRE portfolio. Will the new company understand the impact on the property portfolio before implementing a new financial modeling system?