One of the Most Significant Deals in Home Building History
Project Overview
In late 2017, Lennar Corporation announced the acquisition of CalAtlantic Homes in a deal valued at approximately $9.3 billion. The deal closed in February 2018 and Lennar planned to fully integrate the firm within the current fiscal year ending in November 2018. This represented one of the most significant deals ever in the home building industry with regards to scale and created approximately $18.5bn in equity market capitalization.
Lennar partnered with RealFoundations to plan and execute the acquisition integration of CalAtlantic utilizing the most efficient and effective approach possible. The goal was to create a scaled, best-in-class home-building platform that changed the landscape of the industry, as Lennar became the largest home builder in the U.S. by revenue.
Challenges
The RealFoundations and Lennar project teams partnered to:
- Efficiently migrate two disparate operational and accounting platforms onto a single standard as quickly as possible,
- Manage a combined associate base of over 14k employees through an expedited deal cycle, providing sufficient guidance and direction to mitigate operational disruption and attrition,
- Aggressively work towards significant synergy and cost savings goals established as part of the deal baseline and as declared to shareholders, and
- Establish a precedent to successfully execute complex and large-scale acquisitions within a short timeframe.
Value-Add Solutions
- Established the Integration Management Office (IMO) as central project control,
- Coordinated and assisted the migration of JDE, Hyphen BuildPro and implementation of Salesforce for 31 Divisions across 5 geographic regions,
- Coordinated and assisted Lennar in determining how the ancillary CalAtlantic applications and infrastructure would be handled moving forward,
- Developed and executed a divisional cutover playbook, which was used to manage the detailed task list for each of the production migrations, and
- Leveraged a complex data conversion process to convert bid contracts to item-based takeoffs, realizing a significant benefit of the deal as a whole.
Realized Benefits
- Increased scale, driving more efficient operations with expected direct cost savings and SG&A synergies of $160MM in FY2018, and $365MM in FY2019,
- Rapidly executed the migration with a focus on minimized business disruption,
- Developed a plan to sunset over 40 legacy applications,
- Migrated 31 divisions across 5 regions over 20 weeks, and
- Demonstrated the ability to successfully execute a deal of this size.
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About Lennar Corporation
Founded in 1954, Lennar Corporation is headquartered in Miami, FL and is one of the nation’s leading builders of quality new homes. Corporate enterprises include multifamily communities, commercial properties, land development, financial services, and asset management. In 2017, the company was the largest home construction company in the United States after it purchased CalAtlantic Homes. The company is ranked #2 in the 2020 Builder Top 100 by closings and is #147 on the 2020 Fortune 500.
About RealFoundations
RealFoundations (RF) is the world’s foremost professional services firm focused solely on the real estate industry. Through our delivery of Management Consulting and Managed Services, we help companies that develop, own, operate, service or invest in real estate make better, more profitable decisions. We are proud partners to over 500 real estate companies around the globe, providing accelerated solutions that solve some of real estate’s most complex challenges. We Make Real Estate Run Better.
