Steve Murray Brad Inman talks to Steve Murray, who owns Real Trends Consulting and has handled more than 2,250 client assignments for realty firms over the past 28 years, with more than 660 merger and acquisition (M&A) assignments, totaling $11.8 billion in aggregate value. A 37-year real estate veteran, Murray publishes the Real Trends 500 and the Wall Street Journal/REAL ranking of the nation’s top sales professionals. He is the co-author of four books on the valuation of residential real estate brokerage.Brad Inman: I'm so excited today to have Steve Murray, who is going to talk today about brokerage M&A -- mergers and acquisitions -- what's going on in this hot, hot M&A market for real estate brokerages. Welcome Steve. Steve Murray: Nice to be with you. Where are you traveling? Today in Nashville, Tennessee. So, Steve, tell me this -- I think a couple months ago, you and I chatted about trends. Your specialty is M&A and brokerage, and you were...
- Valuations for brokerages are as high as they have ever been.
- Standard valuations today are five to six times trailing EBITDA (earnings before interest, taxes, depreciation and amortization).
- NRT, Realogy and HomeServices are very active acquiring brokerages. Regional franchisors, like Howard Hanna, are also doing deals on the buy side.
- There are two buckets of sellers: older broker-owners and younger companies who need capital to “go to the next level.”
- The brokerage business is getting more complex, with new technology that creates uncertainty.
- Brokers are feeling downward pressure on margins, higher splits to agents and regulators like CFPB over marketing services agreements.
- Teams that act like businesses are creating asset values that may be saleable in the future.