How much do small brokerages get acquired for?
I have seen some small brokerages get snapped up by the big firms (CBRE, JLL, Colliers etc) and the team now works for them. I have heard firms pay 10x multiples (not sure if it's on fees written or net profit).
Let's say you have a 2 man team and you write $2m worth of fees a year. You take home $750k each with $500k profit left over.
Does JLL for example buy out the firm for $20m (due to $2m of fees @ 10x) or $5m due to net profit ($500k at 10x)? Doesn't matter about the multiple more interested in what figure they use.
However much they demand/are willing to offer to the buyer in value
One of the old shops I used to work at was in talks of being acquired (it never panned out). While I wasn’t at the table, I was under the impression the purchaser was using a low multiple of net income. It also sounded like long standing top producers had to commit to staying at the firm for x years following acquisition. My two cents.
whatever the public brokerages multiples are and take a 25%-50% off that multiple due to higher inherent risks in the smaller brokerages
Nice
I've heard that a lot of times there will be production requirements over the first few years before the big money is unlocked.
Makes sense
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