The Closing: Mark McLaughlin

Apr.April 20, 2018 06:00 AM
Mark McLaughlin (Photo by Jeff Newton)

Mark McLaughlin is the CEO of Pacific Union International, the largest independent residential real estate brokerage in the state. He acquired the company in 2009, following a stint in commercial real estate and the sale of his previous brokerage, Morgan Lane. Under McLaughlin’s lead, Pacific Union has grown from 425 employees with $2.2 billion in annual sales volume to more than 1,700 real estate professionals with nearly $14.1 billion in sales in 2017, a representative from the firm said. The exponential jump in numbers is largely a result of Pacific Union’s acquisitions of several brokerages, including John Aaroe Group, Partners Trust, Gibson International and the Bay Area-based Empire Realty Associations, all of which occurred in the past two years. Pacific Union recently brokered two of the top deals in Beverly Hills — for $70 million and $65 million — as well as the second-priciest sale in Malibu’s Carbon Beach, for $48 million. In this interview, which has been edited and condensed for clarity, McLaughlin chats about next moves for the firm, which is aiming to hit $18 billion in sales volume by the end of the year.

DOB: September 2, 1959
Lives in: Marlin County, outside San Francisco
Family: Divorced with two daughters and one son

What was your childhood like? We moved every year. I was never in a grade school for longer than a year until seventh grade. My dad was at Xerox when Xerox was the Google [of its time], so every six to nine months, my parents would always bring my three sisters and me into the living room and give us an entire bottle of Coca-Cola. We knew we were moving because we were never allowed to have an entire bottle of Coke.

What kind of student were you? Terrible. C student on a good day.

How did you get into real estate? I wanted to be a really small fish in a big pond, so I got into commercial real estate. The guy that hired me gave me some advice: “You see all these guys and gals, every time they close the deal, they buy a faster car, a finer suit, and they don’t invest in real estate. When you get your deals closed, take some of the money and invest it in real estate.” When someone so successful tells you that, you stop and listen. And I did. [Ex-wife Tracy McLaughlin] and I bought a house for $360,000, turned it around and we made $75,000. I thought it was one of the biggest paydays I had ever had.

Your company has been on an L.A. brokerage shopping spree. What was the negotiating like when you acquired John Aaroe Group [JAG], Partners Trust and Gibson International? They all had different personalities and they all had different needs; it’s just like buying and selling a home. No two are going to be the same. The important thing was to map the financial and the legal side of the transaction to the cultural side of the transaction. The Partners Trust team was completely eager to become Pacific Union on the first day, [but with] the rich history of the John Aaroe brand, we thought we should take this slowly. Things changed along the way.

While we’re on that subject, what made you decide to rebrand those firms to Pacific Union after announcing that each would keep its own name? It became really obvious to John [Aaroe] that the future was together, not to run three parallel brands. John is a shareholder, and in our shareholders agreement, he maintained the authority on the decision as to when to rebrand. So he made the decision that it’s time to accelerate the branding expectation, and it ended up being January1. [Aaroe retired shortly after, in September.]

Are there more expansion plans for Southern California? Yes.

Can you tell us about them? Not yet.

In 2014, Fidelity National acquired a majority controlling stake in your company. How do you expect to keep that small boutique brokerage feel — that companies like JAG and Partners Trust had — under this structure? Fidelity National Financial came in as a 19.9 percent partner, alongside Tracy and me when we bought the company in 2009. We had been partners for five years when they decided they wanted more in the company. So I have all the rights that I had as a majority shareholder. They don’t want to run the business. We don’t send decisions down from San Francisco to L.A. to execute; we steal ideas from Southern California and execute them up north. I didn’t come from corporate, and I have no interest in corporate. I don’t own a necktie. I don’t own a pair of socks, so I don’t think we’re going to go very corporate.

You’ve previously said that not all deals go through Fidelity. How do you decide which do and which don’t? [The title companies] have to compete for that business in the same way anyone else does. The management doesn’t have a voice in that.

You recently hired Stephen Pugh to lead your commercial division. Are you planning to expand this segment in Southern California? Yes. I think we’ll be most successful in a private investment or tranche of commercial real estate. So the $2 to $25 million asset class, whether it is multifamily housing, mixed use [or a] single tenant office building, we will be part of that practice.

What’s the best deal you’ve ever closed? Pacific Union. We put it in contract and closed during the darkest of dark times: the bottom of the Dow in March 2009. We put it in contract in the second week of April and closed in August. In the 90 days leading up to it, I woke up every day thinking, “This is absolutely crazy, I shouldn’t do this,” and then the next day I would woke up thinking, “This is the best thing in the world.” So time will tell, but I will never see an opportunity like that in my life [again].

What was the worst deal? As part of our divorce, we sold our residence in Squaw Valley for $1.1 million at the bottom of the market. We had bought our house for $1.6 million at the top of the market. But in the middle of our transaction, I looked down at the paperwork I was signing, and it just clicked — the guy buying it was the guy I had bought it from. So six years later, he bought the house back for half a million dollars less. I said to him, “This is the greatest trade around — I’m just on the wrong side.”

How do L.A. brokers differ from SF brokers? No comment. Ask my competitors. 

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