The Power Broker Roundtable is brought to you by the National Association of Realtors® (NAR) and Kymber Lovett-Menkiti, NAR’s Broker Relations Liaison. Watch for this column each month, where we address broker issues, concerns and milestones.
Kymber Lovett-Menkiti, President/Regional Director, MG Residential, Keller Williams Capital Properties, Keller Williams Realty International, Washington, D.C.; Broker Relations Liaison, National Association of REALTORS®: A strategic merger or acquisition can offer significant benefit for all parties. But every transaction is different, from the motivations of the broker/owners involved to the way the deal is structured to the impact on the agents of both entities. Then there is the matter of timing. According to data from Dealogic, the number of restructuring and turnaround deals in real estate globally increased by 20% in 2020 compared to the previous year. Now we find ourselves in a normalizing market. What does that mean in terms of the opportunity for mergers or acquisitions today?
Chris Trapani, Co-Founder/CEO, Christie’s International Real Estate Sereno, Los Gatos, California: No matter how good you are in any market, it’s hard to be good at everything. That was the opportunistic thinking behind our combining forces with @properties and affiliating with Christie’s just over a year ago—and without a doubt, the hot market boosted everyone’s mood. Looking back, we love what we did and when we did it. In a sobering marketplace, it can be a little tougher to value brokerages and merge firms. But our trending production shows there is renewed buyer demand. There is opportunity out there for firms making thoughtful, strategic moves for the long run.
Bess Freedman, CEO, Brown Harris Stevens, New York, New York: We had had several earlier discussions about merging with Halstead, but we got serious about it in March 2020 and completed the deal three months later. It was absolutely the right thing to do, but the truth is, had it not been for the pandemic, I’m not sure it would have been done. Today, things are different, moving more slowly, and a lot of smaller companies have already been eaten up by larger ones. But there is still opportunity, if the cultures are right, to pick up a smaller company or two and tuck them into your business.
Christina Pappas, President, The Keyes Company, Miami, Florida: We believe in the adage, “Buy when everyone’s selling, and sell when everyone’s buying.” As the market slowed, we completed the acquisition of two good-sized brokerages. We brought on 150 agents and expanded our footprint in the South Florida region—and we have other irons in the fire. There are brokers who are just plain tired after the frenzy of the pandemic years. They are ready to retire, and if they’re certain they’re doing right by their agents, they are open to a strategic deal.
KLM: We seem to be three-for-three on the fact that there is still opportunity. How aggressively are you looking to grow?
BF: We’re not interested in growth for the sake of growth or in getting too big too fast. We have plenty of opportunity to grow organically. But brokers do reach out, and we keep an ear to the ground. We’ve been in and out of discussions on one deal, in fact, that could happen if the economics work and our company cultures are compatible.
CP: Economics are huge, but culture is golden. You can’t put a price on synergy. Priority one for us—and for the selling broker—is to be certain the agents we will be bringing on are a good cultural fit. That will remain at the core of our values no matter how large we become.
CT: Mobile brokerages grew fast during the pandemic, and more than a few good producers went out on their own. Now, some of them are closing up shop or returning to brokerages for culture and collaboration. Agents want to come back into the office, and they want a prestige brand with top-of-the-line resources.
KLM: Many brokers consolidated office space during the worst of the pandemic. How will acquisitions impact your brick-and-mortar?
CP: We did some strategic consolidation, but we are also building out new offices to accommodate our growing agent count. The numbers we are seeing in sales volume and sold units clearly support that.
CT: The goal when it comes to mergers is to combine forces with someone who you can add value to and help take each other into the future.
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