A Better Exit Plan For Real Estate Brokerage Business Owners
by Realty Office Business Brokers
If you're like most real estate brokers...
You started your career as an agent, listing and selling real estate. You were good at it. Then one day the entrepreneurial bug hit... and you decided to open your own shop!
Back then, you knew how to start your own business, and you grew your roster of agents and your business. But now, years later, you realize you never planned a profitable way out – AN EXIT PLAN!
The usual approach for most real estate brokerage owners is to:
a) sell to a long-term employee or competitor, and/or b) call a business broker to find a buyer and handle the sale.
WHY NEITHER IS USUALLY THE BEST SOLUTION...
Even during good times, a single-office real estate brokerage business (assuming it's saleable) rarely sells for more than 1 or 2 times its recent annual earnings. Franchise shops statistically sell for a little more – maybe 1.5 to 2.5 times earnings. Either way, the buyer usually wants owner-financing in what is called an "earn-out" –– you don't even get your money all at once. Worse still is the typical clause that adjusts the final purchase price if a substantial number of your agents go elsewhere before, during, or within so many months after the transition.
Especially in the case of real estate, because of "licensing," the usual buyer is someone already in the real estate business, someone like you way back, or your competitor today.
REALITY CHECK: Think about it... How much will your competitor pay for your business when they figure they can simply open up shop across the street and lure away your agents?
THE SOLUTION IS A "TREBB" CONVERSION:
Okay, we admit, it's an odd-sounding acronym short for "Turn-key Real Estate Brokerage Business." But, when you learn how profitable it can make your transition from being a full-time brokerage business owner to a retired brokerage business owner, you'll start to like the sound of it.
A TREBB is a unique and lucrative solution available to broker-owners who don't want to sell their company for a fraction of what it has earned them over the years; who don't want to take the chance on a salary+bonus hired-help manager; and who, at the same time, don't want to give up the income stream their business currently affords them.
That is where a TREBB can bridge the gap via OUTSOURCING:
The TREBB management model is the creation of Compass Realty Systems ("CRS"), a professional third-party real estate brokerage business management company (Yes – outsourcing has hit the real estate industry, too).
This proprietary management model allows real estate brokerage business owners to outsource not only the daily onsite broker-manager duties, but also the back-office administrative, licensing, and accounting functions. (All of this is better explained by following the link at the end of this basic introduction).
And, the conversion process is simple because Compass Realty Systems handles everything.
YOUR AGENTS WILL LOVE IT TOO!
When an office makes the conversion to the TREBB management model and picks up the entire CRS Toolkit, the agents enjoy a host of programs that helps them work less and earn more. This toolkit doubles as a recruiting tool and allows us to grow your roster of agents and help you earn even more money.
THREE (3) EXIT PLANS –– YOU CAN GET CASH TODAY AND CASH TOMORROW:
Besides being a management system, the TREBB business model is a broker's exit plan. At a time that you choose, the TREBB system provides owners a way to cash out of the business. Three typical exit strategies include: the immediate outright sale of their company, immediate partial sale, or hold out for an even higher multiple of earnings via a bulk sale, more commonly known in merger and acquisition circles as a "roll-up". We call it our Unified Exit Plan.
Depending on which EXIT plan an owner chooses, they can:
- Sell NOW – get cash, get out, get residuals for years to come, and pursue other interests.
- Sell only a PORTION of their business TODAY for cash, let CRS handle daily management, get residuals for years to come, and at some point in the future, participate in the CRS Unified Exit Plan in a way that gets them top dollar for their remaining ownership in their company.
- Keep FULL OWNERSHIP of their business – but hire CRS to manage it, retain all the earnings, and at some point in the future, participate in the CRS Unified Exit Plan in a way that gets them top dollar for their company to the tune of 5, 6, 7 times earnings, or more.
WHAT ARE THE COSTS?
Those who are wondering how much this might cost –– will be pleased to learn that there are NO upfront fees and NO fixed salary costs paid by the owner. In fact:
- CRS provides and pays the onsite broker manager, the admin assistant, and the bookkeeper.
- In exchange for providing full end-to-end business management services, its TREBB conversion system, and access to an array of productivity tools for the agents –– CRS receives an affordable transactional-based management fee each time a transaction is closed, plus quarterly/annual performance bonuses based on profitability.
- Because of centralized administrative, recruiting and marketing activities, in most cases the transactional-based management fee costs less than what you would pay a competent broker-manager, administrative assistant and bookkeeper.
- Since the end-goal is the sale of the brokerage business –– CRS participates in the sale proceeds whenever the owner successfully sells all or a portion of their equity while participating in the CRS TREBB conversion strategy.
FOR MORE INFORMATION:
- Read Part-2 of this introduction to learn how TREBB works from an investor's perspective. Passive investors are an integral component of the TREBB model. For your complete understanding Part-2 includes a link to an Online Presentation that details the inner workings of the TREBB management model for your complete understanding.
- Realty Office Business Brokers is an independent business broker specializing in real estate.
Visit our website or contact Bob Vanderselt at 314.414.4242.
Copyright. All Rights Reserved. Compass Realty Systems.