Gather data on these five factors before you negotiate an acquisition.
- Culture. Does a professional management staff or a broker-owner operate the company? Like-operated companies have a better chance of clearing that all-important first hurdle: compatibility.
- Growth potential. Is the company concentrated in a market that’s poised for growth? Even stumbling companies can be a smart buy if new households are forming in their area.
- Profit picture. Is the company making money, or can it be coaxed into profitability, say through management reform?
- Existing management. What are the strengths and weaknesses of the people who run the company? With good managers at the helm, the logistics of merging your company with one outside of your market area are significantly eased.
- Acquisition structure. What kind of deal makes the most sense? For example, if you want to keep key officers at the helm, it may make sense to buy a percentage of the company and leave a portion in the seller’s hands.
Sources: Richard Smith, CCIM, CRB, president, Coldwell Banker United, REALTORS®, Bryan, Texas; Merle Whitehead, CRB, president, Realty USA, Orchard Park, N.Y.