How long will this last?

For title agency owners, 2021’s most asked question is ‘how long will this last’? Some are concerned about staffing while others worry about missing their window of opportunity when the current seller’s market (for title agencies) becomes a buyer’s market. They want to make as much money as they can right now yet reap the rewards of a deal before the inevitable turning of the tides. They are scared both of doing something too early and leaving a pile of money on the table, as well as waiting too long and missing the current window of opportunity we know is available through our active and qualified pool of buyers/investors.
 
Can you have it both ways? I think not…
 
Some look to economic forecasters for guidance. There clearly is no shortage of ‘experts’ when it comes to economic forecasts. Maybe it’s just me, but I see economic forecasters as akin to fortune tellers…namely ‘entertainment value’ only. I think none of them REALLY knows anything for sure. Isn’t the best they can do nothing more than an educated guess? Their ‘qualified’ answers telling us that the market will go up until it goes down always connote disingenuity to me and remind me of how airlines communicate (i.e. ‘your flight is delayed because it’s not leaving on time’). Why take any of them seriously? Do they have a crystal ball?
 
So—how long will this last?
 
Unfortunately, there is no one answer.

I’ve learned that it is always prudent to focus on what we know to be true as a starting point while accepting that there are things we can and cannot control.

There certainly is value in de risking and taking chips off the table. That value is very personal to title agency owners, some of whom are better able to tolerate market vagaries than others. If you are close to retirement and want to get out on top, then now is probably the right time to call us. If you are not worried about technology changes and feel you can grow organically and not benefit from being part of a larger entity, then now is not the right time.

What we know to be true is that even if the sky falls in there will always be a baseline level of title activity for buy/sell, refinance and commercial. People buy and sell because they get old, have kids, get married, get divorced etc. Rate and term refis become cash out. Commercial office towers may flounder while commercial logistics and multi family flourish. The real question relates to how much of the pie you have and how you are going to get more of it. There is almost always room to grow market share. It’s the ultimate response to a downturn and bodes well for value in a sale. The bigger question then relates to HOW you will grow as well as your ability to pivot and respond to change in the market.

Buyers of agencies want to know how you will sustain your business in a downturn. Do you have a robust sales force? Do you have a strategy revolving around stickiness such as AfBAs or well done lender integrations? Do you have a variable cost structure due to inserting an outsourcer who actually knows what they are doing (ask us -we know the good from the bad)? Do you have a corporate concentration issue (i.e. too much business from one source)?

There is absolutely no downside to working to grow your business NOW. Even if you decide to sell your value will be positively impacted by a growth trend and a well reasoned set of projections.

Shameless plug: We are different than any other M&A firm in the country. Truth be told I loath the phrase “Mergers and Acquisitions’. It’s such a fancy phrase and does not really convey what we do -namely help people buy and sell title companies in a FINRA and SEC compliant manner involving licensed Investment Bankers and a Securities dealer. We KNOW title. We have built and run multi state agencies ourselves. Our advisory services team are pros at workflow design and advising on ways to improve profitability. We even have a training program for title sales reps. A starting point in our process always involves a thorough evaluation of your business -much more than simply looking at your P/L. If we feel you need to make changes before going to market, not only will we tell you that; we can also show you what to do and how to implement.

Bottom line—while there is no scenario which excludes an element of risk in terms of timing to sell, efforts to grow your business always makes sense.

-Howard Turk

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