8 Reasons Companies Look for Merger/Acquisitions
Truly progressive brokerages are always on the hunt for growth. Mergers and acquisitions are the fastest way to increase market share and top-line revenue. There are multiple reasons a company might seek growth by these means. When approached by someone about possibly acquiring your company, it’s important to be open to the opportunity, but also to seek to understand their motivation. Here are 8 of the top reasons a company might want to acquire yours.
1. Increase Market Share
Market share can be an important metric for strategic growth. Companies with significant share often see incredible advantages in marketing and branding. Your company might be attractive for a company looking for a boost in share. If that’s the case, congratulations. You have options!
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2. Management or Leadership Realignment
The right manager or executive can make or break a company. Sometimes, the right person for the job already owns or runs another company. When that happens, both companies might benefit from a merger. If you are approached, consider it a compliment, and have a conversation.
3. Increase Profitability
There is a thing called “economies of scale.” As a company grows, they can create a more efficient organization by streamlining services, cutting out duplicated tools and tech, or even merging office space. There can be a significant motivation for local mergers with larger companies. It can benefit all parties, when done correctly.
4. Add Agents or Teams
Ultimately, more headcount is the main goal of any merger or acquisition. Productive agents are the life blood of any thriving brokerage. A quick method to add large numbers of agents is to merge or acquire another company. If you have done a great job attracting talent, don’t be surprised when someone else notices.
5. Location, Location, Location
Your brokerage might be in a very desirable market or physical location. That might be enticing for another company to approach you. Strategic geographic placement of offices can be a huge benefit to the growth of a real estate company. It may be worth having a chat to see if there is some potential synergy.
6. Better Marketing Visibility
In addition to location, marketing and branding visibility can be a cornerstone of company success. Your company may have done an excellent job at building a well-known, local brand. If that’s the case, it may be especially attractive to another company to capitalize on that success.
7. Strengthen a Niche
There is great power in being good at niche marketing. Whether it be luxury, commercial, waterfront, new construction, etc., your accomplishment in breaking into a profitable niche will no doubt attract potential suitors. Your expertise can go a long way to build an amazing company moving forward!
8. Ancillary Businesses
Most successful brokerages have at least laid down the framework of ancillary services. Mortgage, title, property management, home warranty, and insurance relationships can vastly improve a company’s profit margins. If your company has those relationships or has a large unit count, the value of your book of business will greatly increase. Cash in while you can!
These are a few of more common reasons the brokerages choose to pursue growth through mergers and acquisitions. The best advice for any owner approached on the topic is to be open to having conversations. You just never know what may transpire. You should feel proud that you have built a company that is being noticed.