This South Yorkshire and North Derbyshire-based estate and lettings agency has made three acquisitions in recent times and has picked up some handy tips to share with other agents on how to make your acquisition a success.
Estate agent Redbrik has been expanding its operations in recent years through the acquisition of three carefully selected companies.
Its latest acquisition of Preston Baker Sheffield’s assets took place during the UK’s lockdown. The long-standing relationship between the two organisations helped to mitigate any delays and issues which might have occurred when approaching such a deal during a global pandemic.
Jennifer Hitchman, Sheffield Lettings Manager at Redbrik, shares four tips that you can follow to ensure similar success in agency acquisitions
Define what your agency wants to undertake
Do you want to grow your agency’s physical office footprint by purchasing premises and personnel? Or do you want to acquire contracts to expand your base of quality customers - and ensure a broader regional coverage? Making this fundamental decision will help you grow your agency in the right way.
“The kind of acquisition we look at, when it’s the right fit, is acquiring contracts - the landlord contracts, the existing tenancies, and the fully managed stock,” says Hitchman. “Out of our three acquisitions, we’ve never taken staff or premises. The first acquisition we did about three years ago, we bought the company name but the two directors who were running it were retiring, so it was still not staff or premises. The transaction was beneficial both to us and to them.”
Find the right portfolio - and a matching company ethos
“You need to do the full stock check and make sure it's the right quality stock for you, the right quality of property, the right calibre of landlord,” says Hitchman.
The regional coverage is also important - Hitchman highlights the practicalities for Redbrik of “a good split geographically across Sheffield to give us extra coverage.”
Just as important when deciding to acquire is the culture fit between your two agencies. “The actual values of the businesses and the ethos of how both companies work was really key. Preston Baker Sheffield also wants to do the right thing by its clients. There's a lot of goodwill between us, the handover has been superb,” says Hitchman.
Get to know your new landlord customers
When you acquire a company, landlords have no say in the matter - but this doesn’t mean that they should be kept in the dark. Setting out a clear procedure to get to know your newly acquired customer base will help maintain that relationship going forwards.
“What I offered to every single landlord, after introducing ourselves initially via email, was the opportunity to book directly into my diary, to have a Zoom call with me,” says Hitchman. “People naturally fear change, so taking the time to speak with the landlords at the outset has made a big difference to make them feel comfortable and confident about who they're working with now.”
As well as increasing customer confidence, speaking to all landlords can also help when it comes to understanding what they’ll want from you as an agency. “Preston Baker did a super job of handing over the details of individual properties but what they couldn't give us on a case by case basis is the reason that the landlord has that property in the first place. Have they bought it for investment, was it their own home before? Did they have others or are they looking for others? It’s almost like a re-valuation without seeing the property.”
Check the compatibility of your systems
Different agencies have different procedures and systems. Some agencies will have a tech-based approach - like Redbrik - but it’s not the case for all.
“We had one acquisition where the company had well-aligned values, good quality properties, but it was a very paper-based company, whereas we're very tech-based - so there was more administration involved in that acquisition process.”
Hitchman compares this to the latest acquisition, where the software they use made it easier to integrate. “After the acquisition went through, we discovered that they were using Goodlord. It's something that would be a great question to ask if we were looking to acquire further businesses because, for administration purposes, all those tenancies to either renew or re-let - they're all already set up. A digital handover of assets definitely makes things fast, smoother and less laborious.”
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