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Solid consolidation in real estate industryBy Kay Plantes
Jim Imhoff, Jr., CEO of First Weber Group, a Wisconsin real estate firm, correctly read the tea leaves about the real estate industry, where the high costs of technology and economies of scale in marketing are driving consolidation. "Eventually there will only be one or two strong real estate companies in a metro market with a combined share of 90 percent or more," Imhoff said. "Look at Minneapolis and what is happening in Milwaukee," he said, where the markets have consolidated. Imhoff chose the acquisition route to growth rather than letting his company be acquired or using more traditional internal development growth strategies. "All real estate is local. It would be too expensive to put people into a market and have them develop the relationships and reputation they need to succeed," he said. In addition, there were many owners of real estate firms seeking an exit strategy, an opportunity Imhoff seized before others. The result was a bold and well-conceived series of acquisitions and mergers that have made his company the largest real estate firm in the state. With more than 40 offices in Greater Madison, Milwaukee, and north central Wisconsin, sales reached $3 billion in 2005. In Greater Madison, First Weber Group's share exceeds that of the next two largest real estate firms combined. Having a critical mass of agents enables First Weber Group to afford technology and marketing investments that significantly lower costs, while increasing service levels to sellers, buyers and real estate agents. Still, this strategy is not without its risks. About 80 percent of acquisitions fail to achieve their financial goals, largely because of corporate cultural differences (McKinsey and Co.). Imhoff's cardinal rules for acquisition led him to success every time. Imhoff seeks companies that are leaders in their market and hold an impeccable reputation, he says. Pre-acquisition planning and flexibility in commission formulas serve to retain talented agents of acquired firms. First Weber Group also made a strategic choice to focus first and foremost on serving independent real estate agents. For example, the company has created a paperless system that gives agents Internet access to complete information, helping them better serve sellers and owners. The company also generates leads for real estate agents from a Web site that got 166 million hits in 2005 and from a relocation department that calls on Wisconsin corporations. Awards ceremonies, customized marketing programs and personal Web sites for agents also serve to attract and retain agents. Imhoff's leadership also ensured success. His enthusiasm for his business, his 140 employees, and some 1400 agents is infectious. Asked what he enjoyed the most about building his company, he didn't miss a beat in responding, "I love people." He is also a doer. "What you really need for acquisitions is the guts to get up and go do it," Imhoff said. As Imhoff realized, holding onto a belief that your company can survive consolidation by remaining the same is tantamount to a death sentence. As a leader, you have to take bold risks to emerge as an industry leader -- whether that decision is to be the consolidator, align with the consolidator, or refocus on a defensible niche. Either way, the key is to shape your company so it can compete in the years to come, not just tomorrow. plantes@execpc.com madison.com ©2009 Capital Newspapers. All rights reserved. |
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