What Buyers Consider When Evaluating a Title Agency: Business Mix

What Buyers Consider When Evaluating a Title Agency: Business Mix

In response to the challenges facing the title industry today, we are initiating a series of blogs written with the intent of helping independent title agencies position themselves for success in a M&A process. This is the first blog in the series, and will review business mix. Understanding and aligning with buyer preferences creates opportunities to maximize value.

Business Mix

Buyers seek agencies whose business mix matches their strategic objectives. Not all buyers want the same thing. Therefore, the type of business a target title agency conducts is typically one of the first considerations for a prudent buyer.

Historically, a title agency that derives more than 25% of its revenue from residential refinances is seen with caution unless it has strong system integrations with high- volume originators. Even then, it needs to outperform others in SLA compliance or have unique technological capabilities to be considered desirable. The criteria are subjective; for instance, a mortgage lender acquiring a title agency might prioritize an agency with considerable experience in processing high -volume refinances to maximize the title business they can compliantly direct. Otherwise, the market views significant refinance volume as too volatile to attribute much value to it.

Other title agencies may desire expanded product lines. For instance, a refinancing firm might seek conventional residential buy/sell to broaden their offerings, while a commercial firm might seek residential title business for the same diversification purposes. Niche product lines are seen as growth opportunities, particularly depending on the current economic cycle. For example, there may be an increase in demand for default-related work in a foreclosure-prone environment. Sometimes, strategic buyers simply want to expand their geographic footprint and look for firms similar in makeup to themselves. Some buyers may aim to monetize their economic output or leverage commercial title expenditures and seek commercial expertise to capitalize on these relationships.

Many agencies have a wide range of products which financial buyers (investors) appreciate, especially when the agency’s management team is eager to grow, has bandwidth and can absorb smaller agencies. That is often referred to as a ‘platform’.

There is currently a high demand for commercial capabilities. This may be due to the fact that some commercial markets operate on a slightly different cycle than residential or simply because margins are usually higher and regulations (i.e. those enabling premium splitting for out of footprint deals) are less onerous.

What buyers want tends to change over time. Today, there’s a high demand for traditional, service-oriented agencies that build their business by nurturing relationships with realtors or lenders and are delivering consistent quality.

Bottom line: No one can be everything to everyone every time. What some buyers want, other buyers shun. Whatever segment of the market you are in, buyers want to see that you do it well. Numbers tell a tale. How well your firm is doing will become apparent in your margins.

Tip: Because we see so many buyers covet commercial capabilities, we think it is a good idea for residential shops to solicit some commercial business and develop the expertise necessary to close those deals. If you do not have that capability, you can explore how to work closely with your underwriter and split premium (most of the time).

Understanding what buyers value can help agencies position themselves for success in the evolving landscape.

Our perspective is not academic. Turk & Co has successfully closed many title agency transactions and also sold Underwriters as well as businesses which support the title industry. This experience serving both buyers and sellers provides unique insight. We believe in sharing this knowledge to benefit the industry as a whole.

We understand that some title agencies may not be able to wait for the information in the upcoming blogs about What Buyers Consider When Evaluating a Title Agency.  If you need immediate answers or assistance, please reach out to us at , or call us at 310 294 9199.

Howard Turk


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