References
NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Quick Facts:
- Twenty one percent of firms reported that the number of mergers and acquisitions for the firm has remained the same from 2011 to 2015 to 2016 to 2020.
Source: 2021 National Association of REALTORS® Profile of Real Estate Firms
- Eight percent of REALTORS® worked for a firm that was bought or merged in the past two years.
- Of the REALTORS® who worked for a firm that was bought or merged, 25% left voluntarily.
- Of the REALTORS® who stayed on to work for a new consolidated firm, 76% say compensation remained the same, compared with 12% who say it increased.
Source: 2022 National Association of REALTORS® Member Profile
Mergers and Acquisitions: The Basics
Guide to Mergers and Acquisitions (Investopedia, Jun. 12, 2022)
“Mergers and acquisitions (M&A) is a general term that describes the consolidation of companies or assets through various types of financial transactions, including mergers, acquisitions, consolidations, tender offers, purchase of assets, and management acquisitions.”
A Merger & Acquisition Leader’s Playbook for Success Where 83% Fail (Forbes, May 17, 2022)
“Mergers and acquisitions never unfold in a straight line. This is why successful leaders of pull from the seven different playbooks that make up the merger and acquisition leader’s playbook in different orders in different situations: strategic, commercial, operating, financial, governance, organizational, and change management.”
What is an Acquisition? (The Balance, Apr. 17, 2022)
Often, acquisitions are an agreed upon takeover in which the sale of a business is desirable for both companies involved. However, takeovers do occur – these are often known as hostile takeovers. The shares in the business being purchased are often bought for more than their current market value, and can be purchased with cash, stock options, or a leveraged buyout.
Merger vs. Takeover: What’s the Difference? (Investopedia, May 5, 2021)
While mergers and acquisitions both combine two companies into one, they are different in one very meaningful way. A merger is a mutually agreed upon combination of businesses, but an acquisition usually implies a takeover of one company by the other.
Real Estate Merger and Acquisition Activity
Newmark’s CEO On Why the Brokerage Mega-Merger is Dead for Now (Bisnow, Aug. 9, 2022)
“Newmark is the nation's fourth-largest brokerage and has been making "bolt-on" acquisitions of smaller firms and broker teams across the country and in Europe, rather than chasing a big M&A deal, Gosin said on the call. Industry analysts told Bisnow this week they expected the other large, publicly traded firms, which include CBRE, Colliers and Marcus & Millichap, to follow the same course.”
What the Rise in M&A and Investment Activity Means for the Real Estate Industry (Union Street Media, Aug. 9, 2022)
“Agent adoption, revenue goals, and integration with your other tools and resources are all important considerations, among many others. Look at your data and have important conversations with your team to see what’s working, where you could improve, and whether you want to do it on your own. If this past year is any indication of the upward trend in digitization and expansion, then we’re expecting to hear a lot more about investing in the real estate industry in the future. For companies looking to keep up with and help lead the shift, the time is now to start planning for 2022 and beyond.”
Fast Pace of Real Estate M&A Activity Seen Cooling This Year (The Wall Street Journal, Mar. 7, 2022)
“We’re seeing a lot more activity from our clients,” he said. Executives are hustling to close deals before the geopolitical picture worsens and borrowing rates increase, he added. Still, company board members may become more hesitant to green-light large acquisitions if the Ukraine crisis expands or appears likely to inflict long-term damage on the global supply chain and U.S. economy, Mr. Hafeez said.”
2022 Real Estate M&A Outlook: Balancing Opportunity and Uncertainty (Deloitte, 2022)
“In 2022, real estate M&A activity will continue to be high, although it will likely be unevenly spread—the result of spillover from the 2021 sector story of “hot” versus “not.” The ability to rapidly pivot and adapt in today’s dynamic macroeconomic environment is an essential attribute of effective M&A deal teams.”
Due Diligence
How to Conduct Real Estate Due Diligence During M&A (+ Checklist) (DealRoom, Jul. 20, 2022)
Due diligence for real estate mergers and acquisitions includes financial due diligence, legal due diligence, property and land due diligence, and economic due diligence. Construction trends, rental trends, local large business trends, and tax breaks are also things to be considered. Investigating from said angles will improve an investors chances of avoiding illiquidity and guaranteeing that the property they are eyeing is fit for purpose.
How to Make Organizational Culture Part of M&A Due Diligence (Gallup, Aug. 23, 2021)
According to Harvard Business Review, seventy to ninety percent of merged companies fail. While there are many reasons for this, company culture often plays a huge but overlooked role in the success or failure of a merged business. There are two main facets of company culture that are examined in this article; organizational culture and work style. By applying what Gallup calls “cultural due diligence,” companies may have a better chance at success.
Due Diligence for Mergers and Acquisitions Through a Cybersecurity Lens (Deloitte, Jun. 15, 2021)
“Over the past few years, cybersecurity has started playing a bigger role in M&A. Several acquiring companies suffered hefty losses as they realized the target company’s past data breaches only after completing the final deal transactions. This, in turn, resulted in significant financial fines and reduction in the target company’s overall deal value that could have been avoided if cybersecurity due diligence had been conducted at the initial stage.“
Business Formation: Choose a Structure
C Corporation, S Corporation, Sole Proprietorship, Partnership, or Limited Liability Company (LLC)? What are the tax, liability, and capital requirement implications of incorporating versus forming an LLC? The resources below offer a basic foundation in business formation considerations.
Seven Steps to Starting Your Own Corporation (The Balance, Sep. 13, 2022)
When starting a business, there are seven basic steps you need to follow; choosing a corporate name and address, selecting a state to incorporate in, selecting a corporation type, determining company directors, choosing your share type, obtaining your certificate for corporation, and processing and filing the incorporation.
Understanding S Corporations (Investopedia, Jul. 16, 2022)
“S Corporation is a variation of a corporation within Subchapter S of Chapter 1 of the Internal Revenue Code. Essentially, an S corp is any business that chooses to pass corporate income, losses, deductions, and credit through shareholders for federal tax purposes, with the benefit of limited liability and relief from “double taxation.”
Partnership vs. LLC: What's The Difference? (The Balance, Jun. 7, 2021)
“A limited liability company (LLC) is a type of business legal entity that combines the liability protection of a corporation with the operations of a partnership. An LLC can have one or more owners, called members. Each member has a percentage of the equity (ownership) of the business.”
Free Government Resources
Did you know that the U.S. Small Business Administration (SBA) provides a robust offering of free online and in-person courses, workshops, sample documents, monthly web chats, and FAQs to assist you in your business endeavor? It's true. Check out the SBA's website to discover offerings relevant to your needs.
The SBA’s Stay Legally Compliant topic page is great for orienting yourself with important steps to take mitigate risk when forming or reforming a business. The Write Your Business Plan topic page offers links to a diversity of materials, including free educational courses, video tutorials, checklists, and more.
The U.S. Federal Trade Commission's Guide to Antitrust Laws includes a section concerning Mergers. The Federal Trade Commission also maintains a Frequently Asked Questions about Merger Consent Order Provisions page
The National Association of REALTORS®’ Real Estate Business Institute (REBI – formerly the Council of Real Estate Brokerage Managers) offers courses on a variety of real estate brokerage topics. Visit the REBI website to learn about their credentials and course offerings
eBooks & Other Resources
eBooks.realtor.org
The following eBooks and digital audiobooks are available to NAR members:
Achieving Post-Merger Success (eBook)
Applied Mergers and Acquisitions Workbook (eBook)
Buying and Selling a Business (eBook)
Charging Back Up the Hill (eBook)
Exiting Your Business, Protecting Your Wealth (eBook)
How to Increase the Value of Your Company (eBook)
Merger and Acquisitions Basics (eBook)
Have an idea for a real estate topic? Send us your suggestions.
The inclusion of links on this page does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.