Strategies and Considerations for an Effective Expansion
While an effective strategy for expediting growth, there are many critical factors a broker/owner must carefully measure and consider long before a merger or acquisition deal closes. In this RISMedia Premier exclusive report, we talk to leading brokers and experts from across the country to unpack the key factors that lead to a successful M&A in order to help brokerage owners bolster their business in an age of strategic consolidation.
Key Topics Covered:
- Valuation evaluation: How to determine what a company is worth in order to establish an offer price
- Opening the books: Recognizing and analyzing the strengths, weaknesses, opportunities and threats (SWOT) of a potential new acquisition and its market
- The kickers: From talent to technology, the most important tangible and intangible assets and attributes a broker/owner should consider when exploring an acquisition
- The right fit: How to determine if your cultures and business models pair well to eliminate churn and maximize efficiencies
- Closing the deal: How to negotiate the right terms and know when to either sign on the dotted line or walk away
- Seamless integration: Now that the deal is done, how to ensure that all the pieces fit together for a smooth transition and long-term success
Section 1: A Path to Expedited Growth
Consolidation is an ongoing trend in business, and real estate is no exception. In fact, the industry is rife with mergers and acquisitions as a means of creating greater efficiencies and expanding a brokerage’s footprint within its own market, as well as new ones.
Section 2: The Current State of M&A
During the recent market expansion fueled by low interest rates, the industry saw new firms open to take advantage of the historic market. When faced with the more challenging market today, some of these firms find themselves unprepared, ultimately seeking an exit strategy.
Section 3: Valuation Evaluation
The keys to learning whether a company is worthwhile or not come from looking at historical numbers, company dollar retention, adjusted EBITDA, trends, office space and locations, management team, culture, reputation/brand awareness, business model, forecasted numbers, proximity to desired market and potential synergies between both parties.
Section 4: Opening the Books: Conducting a SWOT Analysis
After successfully valuing a company, it’s necessary to examine and analyze the strengths, weaknesses, opportunities and threats (SWOT) of a potential new acquisition and its market to determine if it will truly be a savvy investment.
Section 5: The Kickers: Evaluating Every Asset
From talent to technology, there are a number of important tangible and intangible assets and attributes a broker/owner should consider when exploring an acquisition.
Section 6: Finding the Right Fit
While a company considered for acquisition may be rife with great attributes, it’s ultimately about ensuring a good fit between both buyer and seller. If cultures and business models don’t pair well, that could lead to a large churn of employees, which could lower the value overall.
Section 7: Closing the Deal
Once you’ve determined that everything makes sense for an acquisition, negotiation and terms present the next hurdle, and it begins by understanding the seller’s true motivation.
Section 8: Seamless Integration
Once a deal is done, it’s vital that both companies collaborate to ensure a smooth transition that sets everyone up for long-term success. Integration parameters need to be included in the terms from the beginning.
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