Johan Svanstrom may have had a restless night last night. As the new CEO of portal giant Rightmove he’s just been made aware that he has a fight on his hands – and will be more than a little concerned about his share options too. 

Why? At about 10pm last night (Wednesday) the ever-resourceful Mark Kleinman at Sky News broke the story that On The Market plc was to be sold to CoStar Group for £100m and a share price premium of 30%+.

On The Market is the third placed player in the UK property portal world, not so much a challenger but rather challenged where its competitive history is concerned. The platform that was going to be different – ‘the agents’ portal that would not yield to vested interests of shareholders and investors that in the end yielded to the vested interests of shareholders and investors. And seems to have done so again this week.

In its wake may be some wealthier management team members and founder agent shareholders and investors, but a rank and file of agents that have simply been made to pay more money in recent years for the same questionable leads and bad TV ads. Estate agency socialism this is not, despite it being trumpeted as being so.   

But why is Johan rubbing the sleep from his eyes this morning? And why should the UK property industry care about this deal?  

Well, Rightmove has been an unassailable steam train in the property sector having launched in 2000 as Britain’s first ‘proptech’ business, a collaboration thought up by Countrywide estate agency’s Harry Hill and including a few high value competitors.

Roll forward 23 years and Rightmove is now the stock exchange listed classifieds platform with a market cap of over £4bn. It commands a huge market share of domestic sales and lettings listings and operates at about 74% net profit on an annual revenue of £332 million, a number that grows year on year (up 9% last year). It’s an LSE darling.

Not only is it an LSE darling but it has also been largely unopposed since inception. It had a few light punches thrown at it by the likes of Alex Chesterman’s Zoopla subsequent to his mop up of most of the sector’s competitors a decade or so ago, but even Alex’s Midas touch was unable to steal first place from Rightmove. Still, this second place was ultimately valued at £2.2bn when Silver Lake, the US fund, bought Zoopla in 2018. Not so shabby for what some would call the ‘best loser in the space’.

Interestingly, as the ink was drying on this transaction on the West Coast five years ago speculation was that the might of one of the largest private equity firms in the world would supercharge Zoopla and its CEO Charlie Bryant to overtake Rightmove and to grab that number one spot after all. Yet since, Charlie and team have been pretty quiet mending the scars of a business that was in effect a Frankenstein of many others having not only smashed together multiple portal platforms to form one bigger one but also having acquired software businesses (PSG) that itself was a mish-mash of multiple competitors. This spaghetti of businesses has taken a while to unravel and so Zoopla (or ZPG as it has been needlessly rebranded to) has been somewhat distracted and, presumably, is being re-organised and gutted ready for Silver Lake to sell on or re-list in order to realise its profit 

But the On The Market deal is different. And this is why today in Milton Keynes will be a tense day for the Rightmove CEO as he considers the CoStar deal. One thing is for sure and that’s the certainty of some agitated board members and shareholders asking some very blunt questions of Johan Svanstrom and his CFO. ‘What does this mean for us?’ and ‘Should we be worried?’

The public answer will be ‘No, we’re bullet proof’. Yet CoStar are a NASDAQ listed business valued at over $33bn and with a long history of acquiring businesses with which to grow. They own,, LoopNet and about a dozen or so more property entities acquired since 2012 including Andy Miles’s Realla which they purchased here in 2018.

If CoStar have put £100m into On The Market it’s not a private equity play. It’s not to make it leaner to re-sell it. It’s to make it grow and to dominate the sector. 

It remains to be seen whether Jason Tebb, CEO of On The Market, is the person to take the portal to this next stage. He has been a capable pair of hands in re-branding the business as more industry friendly of late. But many will not see him as a ‘growth guy’ and so, as with Andy Miles and many other CoStar acquisitions’ management teams, expect him to exit at some point soon.

When this happens and On The Market is truly grabbed by the scruff of the neck, re-branded away from its ‘Chas and Dave DNA’ and big money is injected into a proper consumer marketing strategy, you may notice the bags under Johan’s eyes becoming bigger and darker by the day.            

Incidentally, at the time of writing this piece only one hour into stock exchange trading since the CoStar news was announced, the Rightmove share price was down 9%.

Go figure…