Years of market sluggishness and aggressive enlargement by large companies imply large offers of the previous have been possible a prelude to extra acquisitions in 2025, Intel survey outcomes and interviews recommend.
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Fee lawsuits and battles involving the Nationwide Affiliation of Realtors have dominated latest headlines. However quietly within the background, one thing else was additionally occurring: Main acquisitions and mergers.
Excessive-profile examples embody Compass shopping for Latter & Blum in April and @properties Christie’s Worldwide Actual Property in December, in addition to Howard Hanna merging with Dwelling Consultants Realty final month. These and related tales increase a number of questions: Will equally large acquisitions proceed this yr? What varieties of corporations will do the buying, and what sorts will likely be wolfed up?
In different phrases, was 2024 a prelude or a postscript to the consolidation story?
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To seek out out, Intel contacted business consultants — for each on- and off-the-record talks — and surveyed brokerage leaders in our newest Inman Intel Index survey.
The takeaway from these efforts is that a wide range of components are converging to doubtlessly make 2025 a banner yr for mergers and acquisitions. Put one other means, there’s likelihood that 2024 was actually only a prelude.
However on the identical time, not everyone seems to be more likely to be a victor on this story. As a substitute, large and highly effective corporations which have a observe document of succeeding in lean occasions will be the ones making essentially the most headlines for M&A offers this yr.
Most brokerage leaders aren’t targeted on M&A
In January, Intel requested brokerage leaders to rank mergers and acquisitions on a scale of 1 to 5. One indicated that M&A was not on their radar, whereas 5 indicated that imminent discussions have been happening. The outcomes urged that mergers and acquisitions should not particularly excessive on the precedence checklist for most of the almost 200 brokerage leader-respondents.
Practically 47 p.c of survey respondents chosen one, that means M&A just isn’t on their radar. One other 12 p.c chosen two, equally indicating that M&A is a low precedence.
Solely 8 p.c of respondents chosen 5, with one other 12 p.c choosing 4 — responses indicating that M&A is a serious precedence.
Outcomes have been related when Intel requested leaders about M&A in 12 months. In that case, 36 p.c of respondents chosen one — which once more on this query meant the subject is “not on the radar” — and one other 16 p.c chosen two. Solely 11 p.c of respondents chosen 5.
Acquisitions stream to the large corporations
None of this implies, nonetheless, that mergers and acquisitions gained’t be a giant deal this yr. The truth is, everybody who spoke with Intel for this story predicted vital M&A information within the coming months.
“I believe it’ll be a really lively yr,” Chris Heller, president of OJO/movoto.com, instructed Intel in a remark that captured a broader sentiment. “I believe loads of corporations want to develop and I believe we’ll see loads of exercise.”
The takeaway, then, is that M&A is probably not evenly distributed; en masse, acquisitions is probably not on each radar, however its a subject that’s very a lot on the radar of some large gamers.
The consultants supplied a number of causes that 2025 is likely to be lively for M&A.
A sluggish market has put stress on smaller corporations for a number of years now.
“You’re going to see corporations mainly saying I don’t see a means out of this and I wish to money my chips in,” Russ Cofano, CEO of Collabra Expertise, instructed Intel.
“Because the business goes via difficult occasions, you are inclined to see loads of consolidation,” Heller stated.
Bigger corporations reminiscent of Compass have managed to develop regardless of a sluggish market.
Compass, for instance, reported development in each income and agent rely within the first three quarters of 2024.
EXp’s agent rely development largely remained stalled in 2024, however the firm did report income features within the first three quarters of final yr.
“The massive corporations most likely really feel like they’ve weathered the storm,” Heller stated. “They’re not 2025 as, ‘let’s simply get to the opposite facet.’ They’re 2025 as, ‘now we’ve got to develop.’”
“With the large gamers, that is a part of their technique, they’re actively learn how to develop their corporations with acquisitions,” Cofano stated. “Versus the smaller corporations that is likely to be extra opportunistic in the best way they strategy an acquisition, via relationships at native ranges.
Cloud-based corporations reminiscent of eXp, LPT, and Actual are rising and have leaner operations than conventional brokerages. Some M&A might consequently happen as conventional operations search for entry to these enterprise fashions.
The Actual Brokerage, for instance, reported final fall that its agent rely exploded by greater than 2,000 between July and October.
“It’s almost not possible for a conventional brick-and-mortar firm to abruptly change into cloud primarily based,” Cofano stated. “They nearly must kill their previous mannequin.”
Non-public fairness corporations have been sitting on the sidelines for the final a number of years.
“A variety of the acquisitions are going to be from personal fairness,” Ben Kinney, co-founder of Place, which made 5 acquisitions final yr. “They’re sitting on huge buckets of money that they haven’t been capable of deploy. They’re searching for alternatives and my telephone is ringing off the hook.”
Kinney additionally stated that capital markets might give extra money this yr to “robust corporations,” placing them in a “place to gobble up the weaker ones.”
Brokers are most taken with making acquisitions
Intel additionally requested brokerage leaders who do have M&A on their radars what varieties of offers they could think about. Most indicated they’re extra taken with gobbling up opponents than they’re in being wolfed up themselves.
A plurality of respondents, or 48 p.c, stated their brokerage buying a competitor of their market was one thing their management groups would think about this yr.
The second hottest response, at 38 p.c, pointed to their agency making an acquisition to develop into a brand new market.
Solely a complete of 23 p.c indicated their management workforce can be open to promoting, both with that workforce staying in place or with them leaving.
The robust survive
Ongoing market stress means one kind of acquisition which will change into widespread this yr will contain corporations that haven’t but found out the brand new regular.
“On the surface they might not appear to be they’re struggling, however they possible are,” Heller stated of some acquisition targets. “Issues aren’t bettering on the charge they want them too.”
“For any actual property brokerage or model, the important thing measure of success is what number of nice actual property brokers you appeal to and retain,” Marc King, former president of Keller Williams, instructed Intel. You develop otherwise you go backward, there isn’t a stasis. Thus, any firm not prepared to evolve, develop and improve its worth to the native agent will possible be a goal of acquisition.”
Nevertheless, the splashiest offers may very well contain corporations which can be thriving.
“In these eventualities the businesses being acquired must see a 1+1=3 situation,” Cofano stated. “They’re not corporations which can be essentially financially struggling or really feel like they don’t have a path ahead. However they really feel like with the acquisition, they and their brokers can do financially higher with new possession and assets and scale and all these issues {that a} bigger group can present.”
Kinney additionally pointed to money stream optimistic corporations — assume regional brokerages or title companies — as doable acquisition targets. “These corporations are bought to personal fairness companies, public corporations, or different worthwhile personal companies buying and selling on a a number of of EBITDA.”
Trickle down economics
Although Intel survey questions targeted on brokerage leaders, proptech got here up repeatedly in Intel’s conversations for this story. And the concept is that for all the difficulty the market has given brokerages, it has been no less than as unhealthy for a lot of proptech companies who make cash from actual property professionals — professionals who in today might have a lot much less money. The result’s that 2025 could also be a interval of winnowing for the proptech world as corporations merge in an effort to outlive, or to chop losses on the eleventh hour.
In different phrases, proptech might change into floor zero for actual property M&A in 2025.
“There’s numerous startups that launched within the final 5 years which can be within the stage the place in the event that they’re not worthwhile they’re going to be targets,” Heller opined. “In the event that they aren’t profitable find a house then they usually occasions merge with different corporations.”
Kinney famous that in tech there could also be corporations which have “unhealthy product match and low income,” wherein case “these corporations are sometimes hearth gross sales, bought for scraps by smaller corporations trying to create new income streams or enhance their very own numbers.”
Different corporations might have good merchandise, however battle with income development. “These corporations are acquired via a mixture of money and inventory, providing founders a possibility to have an even bigger win with the buying firm,” Kinney additionally stated. “They’re usually purchased by corporations in search of to develop their buyer base or product traces.”
Methodology notes: This month’s Inman Intel Index survey was carried out Jan. 21-Feb. 4, 2025, and obtained 652 responses. The complete Inman reader group was invited to take part, and a rotating, randomized collection of group members was prompted to take part by e-mail. Customers responded to a collection of questions associated to their self-identified nook of the actual property business — together with actual property brokers, brokerage leaders, lenders and proptech entrepreneurs. Outcomes replicate the opinions of the engaged Inman group, which can not all the time match these of the broader actual property business. This survey is carried out month-to-month.
E-mail Jim Dalrymple II
