How Real Estate Brokerages Get Acquired – What Makes a Brokerage Attractive?

Step 1: Clean Up Your Financials

To make your business attractive, your numbers have to be clean, organized, and easy to understand.

Scott Wright puts it simply: “We see more transactions fall apart due to dirty data than anything else.” When a buyer conducts due diligence and receives messy or incomplete financials, it undermines their confidence—and possibly kills the deal.

Here’s what you need:

• Updated Profit & Loss statements (P&Ls)

• Accurate general ledgers (GLs)

• Clean commission structures

• Clear records of lease obligations, vendor contracts, and agent production metrics

Want a simple tip? Once a year—ideally in December or January—scrub your GL. Cut the fat. Cancel unused subscriptions. Evaluate every expense. Even better: report your business credit card as lost and see which vendors chase you for payment—you’ll quickly realize what you can live without.

Step 2: Show a Lean, Profitable Operation

Profitability isn’t just about bringing in revenue—it’s about what you keep. That means slashing unnecessary expenses while maintaining service levels.

Remember, when a buyer looks at your brokerage, they want to see a consistent, dependable income stream. If you’ve cut waste and operate efficiently, your net income rises—and so does your valuation.

Here’s the formula we often use: EBITDA × Multiple = Valuation

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) represents your adjusted operating income. Once you account for one-time costs, personal expenses, or owner compensation adjustments, that number becomes the foundation for your valuation.

Depending on market conditions and firm size, the multiple typically ranges from 1.5x to 4.5x EBITDA.

Step 3: Organize for a Seamless Transition

Buyers want more than clean books—they want a clean operation. That means:

• Standardized commission plans

• Easy-to-understand agent splits

• Minimal owner production (or clearly separated)

• Succession plans or leadership teams in place

• Digital systems that track performance and productivity

If your business relies heavily on you—as the producing broker or central figure—it becomes less attractive. Buyers want to step in without losing half the value in agent departures or leadership gaps.

Step 4: Structure Matters – Commission Splits & Culture

Not all commission models are equal in the eyes of an acquirer.

Let’s say your agents are on 95/5 splits with a $10K cap. That might attract agents, but it leaves razor-thin margins. A brokerage like that has to scale massively to show profit. On the other hand, firms operating with 80/20 or even 70/30 splits (without caps) are more likely to be profitable, even at lower agent counts.

And here’s the kicker: when you’re acquired, your agents often move to the acquiring company’s commission model. If their splits are worse than what agents currently enjoy, retention becomes a challenge. So, alignment in commission structure—within 5% retained company dollar—is key to a smooth transition.

Culture also plays a huge role. A buyer wants a firm with:

• Low turnover

• Strong leadership

• A recognizable brand

• Loyal, productive agents

If you’ve built a healthy, positive culture with strong internal systems, your brokerage becomes more desirable—and valuable.

Step 5: Diversify Your Revenue Streams

If you really want to stand out, build multiple income streams beyond just commission revenue.

Many broker-owners are finding success in launching or partnering with:

• Title companies

• Escrow services

• Mortgage joint ventures

• Property management firms

• Insurance agencies

These affiliated services not only boost profits, but they also help insulate your business from market shifts. In some cases, the value of these ancillary services can exceed that of the brokerage itself.