A publicy traded national real estate brokerage firm
A well-known real estate brokerage firm had agreed to acquire and merge into its operations one of its large competitors. Historically, up to 50% of the real estate brokers and agents of an acquired company leave for a competitive firm. (This exodus is referred to in the industry as “breakage.”) Brokers supervise agents, who tend to be loyal to their brokers rather than their firms, and they often leave with their broker. Brokers and agents are licensed and therefore difficult to replace, particularly when many leave simultaneously. Their departure therefore impacts deal flow and can severely decrease the performance and value of the acquired company.
Before the acquisition was publicly announced, Frontier Associates was engaged by the acquiring brokerage to minimize “breakage” as a result of the acquisition.
Staying with the merged company needed to be made more attractive to the brokers and agents than moving to a competitor.
With the combined management team we crafted a message that a brand new organization with unmatched capabilities was being formed, and that all members of the combined workforce would have input into the policies and procedures of the new firm.
We then conducted a workshop for the combined senior management to help them establish themselves as a leadership team and train them in tools and skills to design and communicate the new company’s culture and to lead the development of new policies and procedures.
Immediately after the public announcement, the combined senior management group conducted multiple meetings so that every broker and agent had an opportunity to see and hear firsthand the commitment to the new approach. The core messages were:
- We are creating a brand-new company that exists no where else.
- If you leave within the next 6 months you will end up kicking yourself.
Rather than 50%, the 6-month breakage was around 5%, and the deal delivered more profit to both the sellers and the buyers. Where reduction in workforce was needed, the company was able to make the choices. The management team described these results as “a miracle.”