In the age of consolidation, this month’s National Association of REALTORS® Power Broker Roundtable discusses growing strategically.
Joan Docktor, President, Berkshire Hathaway HomeServices Fox & Roach, REALTORS®, Berwyn, Pa.
Rei Mesa, President/CEO, Berkshire Hathaway HomeServices Florida Realty, Sunrise, Fla.
Pat Riley, President/CEO, Allen Tate REALTORS®, Charlotte, N.C.
John Horning: Iconic journalist Andy Rooney once observed, “Everyone wants to live on top of the mountain, but all the happiness and growth occurs while you’re climbing it.” That would pretty much explain why business leaders everywhere search out strategies for climbing the mountain, and why mergers and acquisitions, certainly in our industry, offer challenge and reward in the quest to rise to the top. But the climb can get tiring, and not every leader is looking to expand for the ages—which brings us to the nature of consolidation in its many and varying forms. Today we bring together three industry innovators who understand the issue from all sides. Joan, mergers and acquisitions have driven the growth of your company from its inception, true?
Joan Docktor: They have, John, for the entire 135 years of our history—perhaps 40 or more over the decades—and we continue to see mergers and acquisitions as a key factor in increasing both our footprint and our services. But like every other part of our business, they need to be managed with care and forethought, and with real confidence that the culture of the company we’re folding in is a good match with the culture that makes Fox & Roach unique in our market.
Rei Mesa: I concur absolutely. We have completed just under 50 acquisitions over the years. In our existing markets and in new markets, we see them as opportunities. It has been a team effort in every case, adding companies that are a good fit with our culture, and making the transition a smooth one.
Pat Riley: As an independent company for more than 60 years, we understand that consolidation can be the lifeblood of companies that want to grow. We’ve acquired 32 small independents in the last 15 years alone, nearly doubling our size and our footprint in the Carolinas. We also understand, as you suggested, John, that consolidation has many faces—such as the joint venture we entered into with Howard Hanna Real Estate Services a couple of years ago, which was a merger with joint ownership. We each remain independent, but our partnership creates an East Coast/Mid-Atlantic/Midwest entity with more than 300 offices across 10 states.
JH: When you are in the acquisition mode, how do you find your prospects?
RM: Our entire leadership team is tasked with exploring acquisition opportunities. How you grow is part and parcel of who you are as a company—your commitment to aligning yourself with companies that share your values and strategies, ensuring it is a good fit for both companies.
JD: In our experience it is very important for the previous owner to not only stay on but also remain very engaged during the period of transition and beyond. The agents know and trust the owner and will follow his or her lead. Retention is key to a successful transition and the owner is key to the retention. If the agents feel that the previous owner thinks this to be a good move for them, they are likely to stay and take advantage of what the new company has to offer.
PR: A prime factor is understanding the goals of sellers—whether they want to stay active, whether they’re eager to retire, or whether selling is their answer to a succession plan.
RM: That’s why it’s so important to ask incisive questions—to understand not just selling brokers’ motives, but also their approaches and business customs. Acquisition is not just about economies of scale. It’s about meeting goals on both sides, which also results in maximum retention of sales professionals and key staff members.
JD: Agents typically don’t like change. No matter how well you think your company cultures mesh, it takes a lot of care and a lot of good organization to ensure a smooth transition and a happy, productive sales force.
JH: Is there a difference in approach when the acquiring company is part of a franchise as opposed to independent?
JD: I don’t think it matters nearly as much as the commonalities in culture, in the way you do things, and in your commitment to providing the resources to keep your people at the top of their game.
PR: On the other hand, some family-owned company leaders are independent to the soul. That was the impetus behind our founding of Leading Real Estate Companies of the World®, a global organization that connects independents who want to remain independent even when they cede their leadership.
RM: In the end, what matters is that every acquisition enhances the benefits to our sales professionals and support team, helps to accomplish our business goals and adds value to a greater pool of customers.
PR: It all comes down to how well we match cultures. You have to commit to that going in. Otherwise, all you’re buying is a bunch of used desks.
For more information, please visit www.nar.realtor.