Scott Wright on M&A and brokerage valuation trends

On this week’s episode of the RealTrending podcast, we are joined by Scott Wright, a partner with RTC Consulting, the premier consulting firm for brokerage M&A and business valuations for teams and brokerages. They’ve collected brokerage and team benchmarking data for the past 12 years. 

Tracey and Scott cover the upcoming Dealmakers Conference and discuss the importance of benchmarking data on brokerage operations, including trends they see in brokerage expenses, gross margin, and how firms are valued. They also explore innovative services brokers can adopt to enhance value, productivity, and recent market dynamics and M&A trends.

Here’s a glimpse of what you’ll learn:

• Real estate leaders can expect valuable M&A and business valuation content at the upcoming Dealmakers Conference.
• Occupancy and personnel costs are the most significant expenses for brokerages, and reducing these costs can significantly impact profitability.
• Brokers can boost their value by adding creative services, increasing productivity, and focusing on scale.
• Teams can have value beyond a referral fee by developing business systems and focusing on equity value.
• Benchmarking data is crucial for understanding how a brokerage performs relative to its peers.
• Managing expenses is important, but recruiting and developing agents should be a priority for long-term success.

Here’s a small preview of today’s interview. The transcript below has been lightly edited for length and clarity:

Tracey Velt: I want to touch on some M&A trends. You know, we went through a period where there was a lot of private equity purchasing brokerage firms, and that kind of ended when the market went down. So what is happening right now? What are you seeing out there?

Scott Wright: A lot of the big national players before COVID, they still haven’t come back. Most are still being very cautious. They’re focusing on some low-hanging fruit. And they’re just not as willing to open their checkbooks like they have been before. Now that being said, M&A is slowly making a comeback. We think we’ve seen the bottom in terms of existing home sales. That’s going to boost confidence in not only sellers as they position themselves for an exit strategy. It’s also going to boost the confidence of purchasers as we start to see our industry recover.

We’re seeing more and more sellers come who are interested. Not sellers who necessarily have to sell, but sellers who are interested in monetizing on their business. And purchasers who are saying, hey, look this environment doesn’t scare me. I want to take advantage of this environment. I want to make acquisitions and I want to grow. It’s not as strong as it has been since before COVID, but we do think there’s gonna be a resurgence of M&A this year.

The RealTrending podcast features the brightest minds in real estate. Every week, brokerage leaders, top agents, team leaders, and industry experts share their success secrets, trends, and lessons learned navigating this ever-changing industry. Hosted by Tracey Velt and produced by Elissa Branch.