Strategy
PEXA’s global ambitions, and share price, relied on it making a big splash in the UK market. Its platform offers end-to-end support for property transactions, and it hoped to replicate its Australian success overseas. Its UK business had already started in earnest, but the somewhat idiosyncratic and fragmented UK property industry was not what PEXA’s strategy had anticipated, so an intervention was needed.
PwC was initially engaged to conduct M&A due diligence on Optima, the UK’s second-largest conveyancing firm, under PEXA’s original UK strategy. The quality of the firm’s work led the client to seek its further support, to understand the nuances of the UK property industry, reset its strategy and help with executing the revised strategy.
The foundation for PwC’s work was wide-ranging research, to develop a rich understanding across the many facets of the UK property market. The firm conducted three strands of research: a survey of more than 11,000 recent home-buyers and remortgagers; interviews with more than 50 professionals, including estate agents, mortgage brokers and conveyancers; and working sessions with mortgage business heads from six of the UK’s largest banks.
From that research, the firm built a consolidated knowledge base that documented the full breadth of the fragmented UK property industry, to obtain clearer insights. More than simply a national overview, PwC’s analysis enabled the client to understand how the UK’s market differed from Australia’s, revise some of the assumptions behind its original strategy, and develop a fresh approach to entering the UK market. As a result, one key aspect of the new strategy became to target parts of the value chain where the research had identified high demand for a technology solution, and low barriers to its adoption.
A priority of the engagement was to identify opportunities around customer detriment, as a central element of PEXA’s proposition. PwC therefore used the knowledge base to identify specific areas in which customers were not being well-served, and helped the client create a roadmap for developing suitable technology and identifying investment or exit opportunities.
At the policy level, the firm’s research identified how the regulatory framework of the UK property industry presented both opportunities and obstacles. Under the FCA’s new Consumer Duty regulations, for instance, PEXA’s offering would equip banks with a platform that enabled them to demonstrate good customer outcomes. Conversely, where regulations perpetuated the UK industry’s idiosyncratic practices, PwC helped the client explore different approaches for lobbying government.
Entering a highly-fragmented market was fraught with challenges and, to accelerate and de-risk the client’s new strategy, PwC Economics developed and tested an econometric model to forecast transaction volumes, and conducted Monte Carlo simulations to develop a robust business case.
By combining several approaches, PwC successfully helped PEXA’s UK business gain Board support and investment for its new entry strategy, and provided execution support on due diligence, deal completion and post-deal integration. As a result, PEXA gained access to more than 30% of the market, and PwC is now its sole UK consulting partner.
View the PwC profile in the MCA Members Directory.