When it comes to selling your company, deep pockets are far from the only thing that matters. From culture to mission to vision to business model, finding the right fit for the future of your firm is critical.
“First and foremost,” says Slusser, “buyer and seller should share similar cultures and business models. That’s the secret sauce that makes a merger work.”
Sometimes, the fit is evident.
Diane Ramirez and co-founder Clark Halstead established the high-end Manhattan brokerage Halstead Real Estate in 1984. It flourished under her leadership, growing to 30 offices and 1,400 agents reaching from New York City and the Hamptons to New Jersey and Connecticut, and in 2001, it was acquired by Terra Holdings, parent company of the venerable Manhattan luxury real estate company Brown Harris Stevens, which acquired the firm in 2019.
“We were two dynamic legacy brands serving an upscale New York clientele, and both under the aegis of Terra Holdings,” says Ramirez, who today is chief strategy officer with Berkshire Hathaway HomeServices New York Properties. “The synergies and growth potential became clear to all of us during the pandemic, so that the acquisition of Halstead by Brown Harris Stevens was a natural option.”
Sometimes, the broker reaches out.
“When Marcia Rand founded Rand Realty nearly 40 years ago, she wanted to build a brand built on caring, trust and personal service,” says Matt Rand, managing partner, Howard Hanna Rand Realty. “Her hope was that my brothers and I would honor her commitment and carry on as a firm built on family values, and when she became chairman, and we took on the day-to-day operations, it was important to all of us to do that.”
With a rich heritage in New York’s Hudson Valley, however, and closed sales of more than $2 billion in 2019, Rand explains that the family also recognized the potential for growth.
“We had many options, but we knew and admired the Howard Hanna family, and we knew they take the same pride in their family-owned enterprise that we do,” he says. “We share a forward-looking culture, close agent relationships and a commitment to providing the full depth of resources agents need in order to provide the best customer experience. The merger was a win-win for both of us, and we look forward to many years of continued growth.”
For the Howard Hanna Real Estate family, it was an opportunity to enter the downstate New York market in partnership with a trusted, respected and like-minded company, explains Howard W. “Hoby” Hanna IV, president of Howard Hanna Real Estate Services.
“We have had a focused growth strategy for many years,” Hanna says. “But we know how important it is for a seller to believe that the buyer will be a great partner. In this case, our two companies have similar philosophies in terms of our agents and communities, and we knew that our combined strengths—and the tools, technology and marketing programs we could provide—would come to define excellence in the home-buying experience for a greater number of people.”
Much like Rand, taking his company to the next level was foremost for Neal Hanks, president of Beverly-Hanks Real REALTORSⓇ in North Carolina and owner of its forebear, W. Neal Hanks and Associates.
As a homegrown business known for its local expertise and personal service, Hanks’ company ranked first in its nine-county footprint based on closed sales volume for 2022 year-to-date. But Hanks wanted more. He wanted access to increased technologies and a larger network without having to make major investments.
“We also knew that we wanted to grow surrounded by ‘family,’” he says.
For more than 30 years, he explains, he and Pat Riley, president and CEO of Allen Tate REALTORSⓇ in Charlotte, North Carolina, had been ‘like brothers.’ They had grown up in the industry together, kept up with each other’s lives and careers, and shared similar values.
In 2018, says Hanks, Allen Tate, which was a leading company in its own footprint, had joined forces to facilitate its own growth with Howard Hanna Companies—and there was no question in Hanks’ mind that this was the team he wanted to join.
“I reached out to them because I knew we would be better together,” he says.
The deal was a no-brainer for Riley.
“I had been in Neal’s shoes when we sought out Howard Hanna in order to take our company to the next level,” Riley says. “I knew the prestige and business cachet Neal’s company would bring, and what a good fit it was with our mission to preserve and grow the independent brokerage.”
The Hanna company, too, knew the fit was right.
“There was a real family feel to our coming together,” says Hanna. “We had nothing but admiration for what Neal had accomplished and looked forward to the opportunity to add value to his organization.”
In August of this year, Allen Tate REALTORSⓇ, in partnership with Howard Hanna Real Estate Services, acquired Beverly-Hanks REALTORSⓇ and closed the deal. Under their agreement, Hanks will continue his role as president of AllenTate/Beverly-Hanks REALTORSⓇ.
Sometimes, you just need to listen.
“I had no interest in selling when HomeSmart first approached me six years ago,” says Kevin Palmer, founder and CEO of Palmer House Properties in Atlanta. “But the company kept reaching out, and the more I learned about their leadership, their company culture and their business model, and how my agents could benefit from the depth of their resources, the more I began to consider it.”
For one thing, Palmer said, he pondered the probability of a post-pandemic market slowdown, and what kind of financial investment it might take in order for his firm to remain competitive.
“Going a step further, it made sense that adding HomeSmart’s resources to our agents’ tool kit would actually allow us to compete and scale up no matter the market,” he says.
Palmer also gave some thought to the fact that selling his company opened new options for him.
“I agreed to retain my position as CEO of the new company for a limited period of time after the merger,” he says, “and I have enjoyed being a central part of the transition. But the length of my tenure here was an important part of the negotiation process. I don’t know what I’ll want to do in a year or two, but I feel like I have a few more startups left in me, and now I’ll be free to examine the opportunities.”
For their part, says Michael Swope, chief revenue officer for HomeSmart, they had had Palmer’s company on their radar for several years before making that first call.
“It made sense to us on several levels that the company was a good fit with our own growth goals,” Swope says, “and our aim was to build enough trust over time so that it ultimately made sense to Kevin as well.”
Phillip Cantrell established Benchmark Realty as a small boutique company in Nashville at the height of the 2006 downturn. By 2019, he had grown it to be the largest independent real estate company in the middle-Tennessee region, with seven offices, 1,300 agents and $3.2 billion in annual sales.
“Business was great,” Cantrell says. “I thought I’d die fat and happy here. I certainly wasn’t looking to sell.”
But like Palmer, he began to get calls from potential buyers. By 2018, says Cantrell, he was fielding a call or two every month.
“I always listened,” says Cantrell. “But the trouble with most of these companies was they wanted to buy us out altogether and send Phillip to the beach—and I had no intention of giving up my leadership.”
The right opportunity came in 2019, when Benchmark’s performance, culture, community values and tech-enabled, 100%-fee-based business model attracted the attention of United Real Estate, a division of United Real Estate Group.
“Our cultures and values were almost perfectly aligned,” Cantrell says. “Dan Duffy and Rick Haase made it clear they not only wanted me to stay on, they even wanted to learn from me, so that together we could build a better mousetrap.”
Benchmark continues to operate under its own brand, Cantrell adds, “but the transactional efficiencies generated by the merger already have inestimable value.”
The best fit for any merger or acquisition, notes United Real Estate president Rick Haase, is one that aligns not just with a broker’s values and vision for the company’s future, but with the broker’s personal goals.
“As for us, we’re in it for the talent pool, the relationships and the great new platform we can grow on,” says Haase. “We look for brokerages that align with our mission to expand our reach—companies with whom we can combine our knowledge and forward-looking spirit to provide a better real estate experience for agents and our clients.”
For those reasons, says Haase, negotiation should be direct and open-ended, and active listening is a must.
“Sellers should feel they are being heard, and feel confident that their goals are being addressed as talks progress,” he says. “Buyers can reinforce their understanding of the firm’s culture, needs and goals by communicating with other key leaders in the seller’s company.”
Slusser agrees.
“There can be no deal if there are irreconcilable differences,” he says. “And it’s never too late to walk away.”