Go to any industry conference and you’ll inevitably see a session on the schedule about succession planning. The thing I notice time and again is that most brokers hear about succession planning, but very few do anything about it.
Why? Because succession planning often feels like biting off more than you can chew—and, if you’ve never sold a company, it’s a daunting mountain to climb.
Let’s dive into how you can get out of brokerage ownership and move into the next chapter of your career and life.
A Solid Valuation
Most brokers have invested an enormous amount of time, energy, heart, soul and money into growing a brokerage. Because of that massive investment, it’s inevitably a difficult decision to sell your company or turn it over to someone else. With an emotionally-charged decision like this, it’s easy to have higher than realistic expectations about what your company is worth; however, it’s important to start your journey toward selling your company with a valuation.
Find an expert in the industry who is savvy in brokerage valuations. Going through the process to get an accurate number for what the fair market value is for your company will also help solidify whether or not you’re ready to sell. If your valuation isn’t at the level you expected, meet with a business coach or brokerage sales expert to determine how you can get your company to the next level of profitability.
An Outsider’s Look
Once you have a solid valuation of your company, take a step back and look at your business as if you’re an outsider. Think about the following aspects of your company:
- Office Space – What’s your square-foot-per-agent ratio? Do you have effective desk occupancy? Are your locations in desirable areas and on par with the competition?
- Recruiting and Retention – Are you growing and keeping great agents?
- Overhead – Are you committed to costly long-term contracts?
- Employees – Are you over- or understaffed? Are your employees effectively managed and allocated for company needs?
- Ancillary Services – Do you own ancillary companies? Are you interested in keeping them or selling them? Are your ancillary companies profitable?
Finding the Right Buyer
Deciding to sell your company is one thing. Finding the right buyer to acquire your pride and joy is another.
Whether you run a traditional GCI-based model or a flat-fee model like HomeSmart, there are others out there operating similarly. It’s easiest when brokerage companies with comparable models merge, since agents are used to being charged a certain way. That said, you can still cross-pollinate brokerage models in an acquisition when you do so strategically.
If you’re in the market to sell, it’s a good idea to start at national real estate conferences. You’ll meet a lot of new people and get to talk to those from outside your market about what’s working in theirs.
Timing Is Everything
Above all else, timing is the most important factor. Selling a brokerage isn’t the exit strategy for everyone, but it’s a great option for a lot of successful operators.
Bryan Brooks is senior vice president of Franchise Sales at HomeSmart International, regularly facilitating mergers and acquisitions for brokerages nationwide. For more information, please visit www.homesmart.com.
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