Purplebricks valuation like emperor’s new clothes, says industry legend Harry Hilll

One of the property industry’s best known figures, Harry Hill, has said that Purplebricks’ £240m valuation is a case of the emperor’s new clothes.

Online agent Purplebricks is due to start trading on the AIM stock market next Thursday, with a valuation of £240m.

Hill ran Countrywide for 20 years, founded Rightmove and is now CEO of Hunters, having steered it through its stock market flotation earlier this year.

At flotation, Hunters had a valuation of £16.9m – vastly short of the well-publicised Purplebricks price tag.

Hill told EYE yesterday: “Does the emperor actually have no clothes?

“Not everybody will remember a funny little song about masses of people admiring his new clothes until one little boy observed that actually the poor chap was naked!

“However, I brought it to mind recently when I saw that someone in their eternal wisdom had decided that Purplebricks, created by guys that I know very well and like, is worth £240m, and that many people believe they will change the world (is that what a disruptive model means?).

“I am a directors of Hunters, a well-run profitable and publicly quoted franchise agency business.

“There are three not dissimilar quoted businesses in the UK– Belvoir, Martin & Co, and Winkworth.

“These four businesses have roughly approaching 800 offices trading around the UK.

“I suspect that more than 50% of the revenue of the four is driven from established letting clients and that next year the four will produce profits of circa £10m and pay shareholders a significant dividend.

“Their combined market capitalisation is around £100m.

“I haven’t seen Purplebricks’ business plan but would bet my house to a box of matches that it will not create a similar profit in the next several years, if ever.

“And yet it is considered to be worth well over twice as much as these four businesses put together.”

Hill added: “Good luck to the founders, and even better luck to people who opt to buy the shares when they start trading on the stock exchange.

“I do think that a percentage of UK home owners will opt to try the very low prices being quoted by online agents, but whether enough of them will do so to enable even one to make significant profits remains to be seen.

“Meanwhile, the Hans Christian Andersen song just keeps going round and round in my head.”

Hill’s words are likely to resonate not just with high street agents, but with Purplebricks founders Michael and Kenny Bruce.

The brothers ran high street chain Burchell Edwards, which they placed into administration and then bought out, with a number of jobs having been shed. The business, with branches in the midlands, was subsequently sold to Connells.

They said they would concentrate on JKM Property Solutions, a business that had Hill as chairman.

JKM had a complicated business model involving buyers putting in offers for run-down properties and JKM doing work such as putting in Magnet kitchens and new bathrooms between exchange and completion.

The business, into which Hill had personally poured £1.5m, was wound down in 2012.

Hill also has personal experience of online agents, having been on the board of easyProperty and originally named as its chairman.

However, he revealed last December that he had resigned – without animosity – because he had “vehemently” disagreed with easyProperty’s valuation, then £66m but now over £100m.

We ran the story about Hill’s resignation here

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  1. The Godfather

    Or put more crudely, you may not be able to polish a **** but you can roll it in glitter!!

    Investors have bought the story that this is truly “hybrid”. It is no such thing, it’s just a 21st Century way of selling privately.

    The true hybrid is yet to emerge……

    1. Bless You

      Have you heard of this Righmove company owned by the corporates who pay nothing to be on it??  Absolute joke,,they will be charging agents £1000 a month to advertise their own properties on it eventually!! lol, what kind of agent would support that.  My thoughts in 2001…and for the record i still use Zoopla!!


      1. Robert May

        Who are the engine that gives every new entrant into the industry the ability to tell perspective vendors what they think a property is worth.

  2. Robert May

    Personally I think it’s funny that people like Woodford are sycophantically followed by a devote team of Tim Nice-Butdim sorts.

    Apology for the  url but it’s relevant to the story http://elitebusinessmagazine.co.uk/finance/item/friends-in-high-places-with-a-high-profile-investor



  3. inthefield

    At last there are stories coming through to cast doubt on this dot.com type farce. I hope these stories reach the masses before its too late.

  4. Property Paddy

    Presumably we will see the true outcome next Thursday, not such a happy Xmas for some investors, I suspect !

  5. Quickbrit

    There’s two Harry Hill’s…

    One’s a badly dressed comedian, and so is the other.

    Sour grapes.

    1. Property Ear

      Not nice Quickbrit – sounds like you have an axe to grind

      1. agent orange

        One is a highly successful badly dressed comedian and the other is a highly successful businesman who had lived and breathed estate agency since he was a boy.

        Sounds like the sour grapes are yours Quickbrit

  6. PeeBee

    “…Purplebricks, created by guys that I know very well and like…”

    And following on from those eleven words you expect anyone in the industry to take anything else you comment on this particular subject in the least bit seriously, Mr Hill?

    Good luck with that.

    1. PeeBee

      DARN!  Somehow lost the bottom of my comment when it posted.

      What SHOULD have followed was:

      Which is a pity because, in the main, what you have said about the ridiculousness of the venture is bang on the money.

      Thought I’d better clear that one up pretty sharpish.

      1. smile please

        What is wrong with knowing and liking an individual?

        Does not mean you have to agree with their business ethos?

        I have a very dear friend but never even pays his employees! – I right t055er to work for but a good friend.

        1. PeeBee

          smile please

          There is NOTHING wrong with knowing – or liking – anyone.

          But if you were going to slag a certain individual off publicly you wouldn’t say he was a right t0$$er in one breath and that he was a good mate in the same sentence.  No-one would trust your judgement from there n in.

          Oh – hang on – you just did… ;o)


          1. smile please

            Same could be said for a lot of friendships on here mon ami 😉

            some times you just think its down right silly line of thought but underneath you know they are a good bloke 😉

            1. PeeBee

              sp – you know I’m just messing with you in part – but you get the point I’m making!

              1. smile please

                Ditto, 🙂 you little ankle bitter!

                1. PeeBee

                  Little ankle biter?  Wrong on so many levels, mon ami! ;o)

                  In fact, at the minute I’m – along with others – greedily tucking into some zonkingly big, fat, juicy leg ends!

                  What frankly amazes me is how exposed certain ankles have been left.

                  Nom… nom… nom! ;o)

                  1. Robert May

                    I wonder who Smile is poking sticks at! It’s the people silly enough to try who succeed!

                    1. smile please

                      It thought from the post it was rather obvious, PeeBee!

                    2. Robert May

                      Ah! it’s nice Peebee is a fwiend

                    3. PeeBee

                      Erm… am I in – or out – of this conversation, chaps?

                      Have I been poked?

                      Answers, on a postcard, please…

  7. Trevor Mealham

    Lets create a company. A VC to throw some heavy cash in. Replicate months on with dice thrown values.

    VC’s like a 5 year exit and the other day media said Purple was 4.5 years on in developing its IT and structure.

    Wad loads of money – then in the news comes founders and backers starting exit by taking out £33m. WHY??? if its such a good model wouldn’t they want more of their funds to remain in it.

    The main biz to Purple is a fund raising vehicle that’s approaching releasing part of its real profits before its reached anywhere near break even.

    The VERY sad thing is that high funded vehicles like this deprive better for industry models from gaining funding.

    1. Robert May

      The better for the industry models don’t need funding Trevor they grow steadily and organically suffering setbacks, frustrations and challenges.

      May 2016 will show up whether Purplebricks is an investment that will live up to its predictions; that is when Messrs Bruce reckoned they would hit £25 million profit . Just 6 months to go industry wide transaction volumes are on their knees, PB have just 0.6% market share,  my estimated for their turnover for 2015 is about £4,000,000  so I find it difficult to see where the £25 million profit is coming from.

      Doesn’t worry me, I haven’t and wouldn’t invest in them.

  8. hodge

    Strange but Face book is worth Billions and is free to use. And Purple bricks will be a window for advertising from lenders, clients direct and lettings in time and no doubt will operate similar to move with us etc.

    I wouldn’t buy shares but don’t underestimate these guys.  soon they will be selling FS appointments to self employed mortgage advisors


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