Our Process

Step 1

We view each business as a reflection of its owner and his/her goals. Therefore, we customize acquisition structure to the individual business and owner situations and include the owner(s) in the design of the offer.

Step 2

We are sensitive to tax implications, so we tend to design to a very tax-friendly structure: usually an asset sale over a term of 4 –6 years. We can include some cash as needed.

Step 3

We prefer to work on a cash-flow-pricing method which tends to drive higher pricing for the owner and allows for some additional money on upside growth (See #4 below).

Step 4

For buy-outs we use the total sales of the business location from the closing day forward so that the owner benefits from the inevitable growth we co-create after the sale.

Step 5

Payments are made monthly, often with minimums guaranteed.

Step 6

Over and above the asset purchase compensation, we often build in management compensation for those cases when the principal stays on in some managerial/leadership capacity.

Next Steps

The exploration begins with a confidential discussion to discuss your goals, concerns, and ideas about your brokerage: where it is and where it’s going. 

We typically execute Mutual Confidentiality Agreements <click here for a sample> so that we can all speak openly in complete confidence. 

To continue our exploration, we ask to review these items: 

  • 2 years company tax returns 
  • 2 years P&Ls 
  • any equipment lease contracts 
  • office lease expenses & facilities costs 
  • agent roster with comp plans and earnings  

All of our planning is customized to meet your individual needs. Therefore, we usually meld the financial information and your vision to co-create scenarios that lead us to good outcomes. 

Real Estate Brokerage Valuation: Cash flow versus Earnings Multiples

Both methods are in regular use in the real estate M&A world. At The Masiello Group we believe that the limitations of the Multiples of Earnings approach has limitations that can be avoided by our Cash Flow valuation approach.

Generally, a multiple of earnings valuation multiplies the company’s EBITDA (Earnings Before Taxes, Interest, Depreciation and Amortization, a generally accepted measure of profitability) by a factor of 3 –5. This method does not account for any future growth in the seller’s buyout. Also, depending on the structure, there can be negative tax consequences for the seller.
The Cash Flow approach has the advantage of being a more tax friendly treatment for most sellers and offers the potential for higher payouts as the business grows into the future. For example, imagine the income growth generated by our proven agent attraction system added to the growth from our agent support systems added to current market appreciation rates. A multiple of earnings approach will not capture that upside.

Is it time to sell your brokerage?

Through our comprehensive evaluation and expertise, we can take your business to a new level.
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