As reported in The Real Deal, who got the information from an online pub called Business Insider, Compass, the tech-oriented brokerage that popped up in New York City and, utilizing significant investor funds bought its way into being one of the country’s largest real estate brokerages, is being eyed for a take-over by a private equity firm.
Bloomberg is also reporting the story.
According to Business Insider, that firm is Vista Equity Partners, founded by billionaire Robert F. Smith. According to Wikipedia, Black Enterprise magazine says Smith is credited with consistently generating a 30 percent rate of return for his investors at Vista Equity from the company’s inception to 2020. Vista Equity Partners was the fourth largest enterprise software company after Microsoft, Oracle, and SAP in 2019. Smith owns homes in Austin, Malibu, California, New York City, Denver, and Florida.
“Compass has not been contacted by any private equity firms expressing an interest in taking the company private,” a Compass spokesperson said earlier this week. “There have been no talks with private equity firms on this matter.”
The Real Deal
Taking a company private often offers many benefits. One is giving executives more freedom to pursue riskier and longer-term projects without the oversight of public shareholders and their demand for rapid profitability. And the company no longer needs to report financial information to the SEC, which many see as an intrusive and expensive burden. Without constraints, some companies are more nimble to soar.
Compass went public in April, 2021, with a $7 billion market cap worth $1.1 billion today. It has been aggressively slashing costs, shedding employees, scaling marketing and other departments, and ending those famous equity grants for new agents. Compass says it aims to cut more than $300 million in expenses this year. Thursday, Compass’s stock closed at $2.96.
But to take the company private would require the buyout of Compass’s largest stockholder, Robert Reffkin, who holds about half of Compass shares. And Compass is outright denying the report.
The Dallas Compass office opened in January, 2018, and grew rapidly with office expansion in Fort Worth, Southlake, East Dallas, Lakewood, Plano, and Frisco. Experts say the Dallas office is one of the most profitable in the U.S.
