FIRST SERVICE STRATEGIC MEMO: OPPORTUNISTIC CONSOLIDATION
Managing Growth Through Housing Deflation
CONFIDENTIAL | Executive Leadership Only From: The 2030 Report Date: June 2030
THE SITUATION
You're running what is probably the least-disrupted company on this list. Your business (managing condos, cleaning buildings, installing closets) won't be disrupted by AI. This is a genuine competitive advantage.
Your challenge: execute disciplined consolidation while housing deflates moderately. The consolidation opportunity is real: there are thousands of small property management companies that could be acquired at reasonable multiples.
YOUR STRATEGIC IMPERATIVES
1. Accelerate FirstService Residential Consolidation
You manage 2.2M residential units. The fragmented competition (thousands of small property management firms) creates acquisition opportunities. Target: acquire 300-500K additional units by 2033.
Economics work: - Acquire small firm at 8-10x EBITDA - Achieve 15-20% cost synergies over 2-3 years - Generate 15%+ return on capital
2. Expand BrandPoint Services
Janitorial and grounds maintenance are fragmented, sticky, recurring revenue businesses. Growth opportunity: 8-10% annually through organic growth + consolidation.
3. Evaluate California Closets
This business is declining and not core. Consider sale by 2032 (market multiple might be 10-12x EBITDA, generating CAD $500-700M in proceeds). Use proceeds to fund FirstService Residential acquisitions.
4. Protect Margins
Labor inflation is real. Property managers and cleaners are in tight labor markets. You need to: - Automate where possible (scheduling, billing, maintenance planning using AI) - Raise prices modestly (2-3% annually) - Improve operational efficiency
Target: Maintain 19-20% EBITDA margin despite wage inflation.
THE 5-YEAR VISION
By 2035: - FirstService Residential manages 3.0-3.5M units (from 2.2M today) - BrandPoint generates CAD $2.0B revenue (from CAD $1.4B today) - California Closets sold or significantly shrunk - EBITDA margin: 20-21% - Revenue: CAD $7-7.5B - Stock: CAD $210-240
This requires disciplined execution, but the business model is durable and the opportunity is real.
The 2030 Report | Confidential Strategic Counsel | June 2030