In a strange way, this buyout makes sense. The smaller firm of Morgan Lane Marin is buying out the larger Pacific Union GMAC Real Estate. Both of these firms concentrate in the expensive market of Marin County, California.
Usually the small guy buying the larger competitor does not make sense. In times of tight credit, it can just look stupid. But not this time and this may be a trend setter.
Why, well real estate sales has changed. The big boys have their older technology and traditional sales methods and have been very slow to change. They have to protect their investment in older tools.
But the smaller firms have had to be closer to the cutting edge. And these days the cutting edge is providing a distinct competitive advantage. So for the smaller Morgan Lane to bring their best practices that they have developed to the larger organization of Pacific Union should have a significant impact on the bottom line.
Watch how this deal unfolds, it may be a precursor to the next wave of real estate brokerages.
The deal, for an undisclosed sum, will bring together 17 Bay Area offices and more than 430 real estate professionals, with combined sales volume projected to reach $2.2 billion this year. As recently as 2000, Pacific Union alone was boasting sales of $3.2 billion, a difference that highlights the recent fallout in the brokerage industry and strongly hints that Morgan Lane picked up its rival at a discount.
Mark McLaughlin, chief executive officer of the Marin real estate company, said he pursued the deal because it offered a chance to inject the entrepreneurial attitude of his high-end-focused firm into a dominant local brokerage. Pacific Union is among the top five regional real estate companies and also focuses on the luxury end.
“The fundamentals are the same; they just have a much larger geographic footprint,” he said. via SF Gate.
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