Content area
Full text
It is no secret that planning to sell or transition a business, regardless of its type or size, can involve significant work. Some businesses, including brokerages and construction firms, face unique challenges in exit planning due to their structure and to licensing and bonding requirements. The good news is that with advance planning, many of these challenges can be addressed, increasing the odds for a successful business transition.
Brokerage firms
Owners of some real estate brokerage firms may believe that without tangible assets or long-term contracts, there isn‘t sufficient value worth transferring to a successor, whether it be to agents in the business or an outside party interested in ownership. However, many firms have a valuable brand and market presence in their communities that attract both brokers and clients. This can create transferable value, even for smaller firms.
Brokers who join these firms may see themselves as key parts of the firm and potential owners, and can be natural choices as successors in management and ownership. Because long-developed relationships and processes tend to drive revenue, exits within broker firms may involve transitioning ownership to new or non-owner brokers over time, and providing opportunities for the non-owner brokers to establish relationships with the exiting broker‘s clients along the way.
Income to exiting brokers can come from a number of sources. A firm can pay a portion of income from certain clients as commissions to the exiting broker on a trailing...