How much Compass paid to scale up

Residential brokerage spent $300M on acquisitions since 2018

National /
Mar.March 02, 2021 04:57 PM
Compass CEO Robert Reffkin (iStock, Getty/Illustration by Kevin Rebong for The Real Deal)

Compass CEO Robert Reffkin (iStock, Getty/Illustration by Kevin Rebong for The Real Deal)

Since 2018, Compass has spent more than $300 million to scale its business, buying other brokerages and tech companies to support its “end-to-end platform,” according to the company’s IPO filing.

Backed by $1.5 billion in venture capital from investors including Fidelity, Wellington and SoftBank, Compass’ growth story has been unmatched in residential real estate. The brokerage aggressively courted agents after launching in 2012, but six years later, it switched gears and began scooping up firms wholesale.

Generally speaking, Compass’ acquisition strategy is to buy brokerages in markets that are top priorities for recruitment. Recent purchases of technology companies indicate Compass is not above buying a ready-made platform instead of building it in-house.

The S-1 doesn’t disclose the purchase price for all of Compass’ transactions, but it highlights some of the biggest, including two key deals that helped cement its dominance in San Francisco.

Here’s a look at what Compass has paid to scale up since 2018.

Paragon Real Estate | 2018 | $18.9 million

Compass’ foray into the San Francisco market started with its $15.8 million purchase of Paragon, which had 225 agents and $2.3 billion in annual sales. The deal also had a $5.9 million contingent consideration, based on profitability targets and payable over four years. Compass has paid $3.1 million so far, for a total of $18.9 million.

Pacific Union International | 2018 | $83.3 million

Compass paid $64.5 million in cash and $3.7 million in stock as part of a blockbuster deal to buy Pacific Union, a 1,700-agent firm with $14 billion in annual sales. The 2018 deal also included a $24.4 million contingent consideration, based on profitability targets and payable over three years. So far, Compass has paid $15.1 million of that amount for a total of $83.3 million.

Platinum, Conlon, Avenue Properties et al. | 2018 | $20.5 million

Compass spent another $20.5 million on a brokerage acquisition spree in 2018. In addition to Paragon and Pacific Union, it bought Platinum Drive Realty (a 100-agent firm in New York), Conlon Real Estate (with 200 agents in Chicago) and Avenue Properties (with 110 agents in Seattle).

Contactually | 2019 | $26.1 million

In February 2019, Compass acquired Contactually, a 32-person firm that creates customer relationship management software for the real estate industry. Compass paid $24.5 million in cash at closing and another $1.6 million was earmarked for the “elimination of pre-existing relationships.” At the time of purchase, Contactually and Compass said existing customers would be able to continue using the CRM, though several competitors balked at the idea.

Stribling, Alain Pinel, Delectica et al. | 2019 | $22 million

When Compass bought Stribling & Associates in 2019, it marked a shift in New York City’s residential industry. Stribling was one of the last major independent firms, and provided Compass with a major boost in sales, with 270 agents and $1.62 billion in sell-side deals in 2018. Also in 2019, Compass purchased San Francisco-based Alain Pinel and Delectica, a New York City-based AI firm.

None of the deals got their own line items, but they cost Compass $14.6 million in cash, plus contingent considerations of up to $13.1 million to be paid out over six years based on profitability targets. Compass has paid $7.4 million so far.

Modus Technologies | 2020 | $70 million

In October 2020, Compass struck a deal to buy title and escrow startup Modus for $50 million in cash and $20 million in stock, payable over three years and based on transaction-based targets. So far, it’s paid $20 million.

Lila Delman Real Estate | 2021 | $6 million+

Compass kicked off 2021 by shelling out $6 million in cash for Lila Delman Real Estate, a luxury firm in Rhode Island. The firm, founded in 1964, has 120 agents across six offices. It’s done $6 billion in sales in the past 25 years. The deal includes another $3.7 million “upon meeting certain requirements,” the filing said.

Bold New York | 2021 | $2 million+

Just ahead of its IPO, Compass scooped up Bold for $2 million. The firm, which has 120 agents, focuses on new rental developments in New York City. The deal includes up to $2 million more in cash for hitting certain business targets.

KVS Title | 2021 | $52.2 million+

Compass upped its bet on ancillary services, shelling out $52.2 million for KVS Title last month. The Washington, D.C.-based firm has 90 employees. The deal includes an additional $26.4 million in cash “in connection with certain contingencies and compensation related arrangements.”









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