Brokers in Focus: Rethinking a brokerage exit strategy
J. Philip Faranda grew a thriving brokerage business over 18 years. He never considered selling — but then the market shifted. Here's his story.
In 2005, I was a sole practitioner of my shiny new brokerage.
In 2022, I was broker and principal of the top-selling independent in Westchester and Putnam Counties with nearly 80 agents and three offices. But this isn't about that 18-year journey — it's about how I chose to align with a larger company in 2023, retire my brand, and take a position in the new company.
Some call it an exit strategy. Some call it selling out. But when you're grappling with that decision, it's more complex. The state of the market, the state of your company and the state of your mind all factor in. I made a number of good calls over the years, and I made one misjudgment; the good calls helped me build a fine brand. The misjudgment, like many errors in business, cost me.
Unlike many entrepreneurs who built their companies to sell, my exit strategy was to set up a scaled brand that would survive me and support my family long after my working days were over. That strategy was rooted in the belief that growing a company from zero to $160 million in annual sales had to be a bigger challenge than going from $160 million to $1 billion.
While that may be true, what I didn't understand was that the skill set needed to go from a solo practitioner to three offices and dozens of agents is significantly different from the gifts required to reach that coveted, scaled, billion-dollar enterprise. That was my misjudgment. I wouldn't call it a Waterloo. I'd call it a Valley Forge — brutal, but ultimately a key to later success.
In 2020, as the industry adjusted to the pandemic and new ways of doing business, my brain trust was seriously considering a different kind of merger, namely the acquisition of another independent brokerage in my market. Lawyers and consultants were retained, and talks meandered for months as my counterpart at the other company deliberated. At the same time, larger companies were approaching me. While I wasn't considering selling at that point, I never declined a meeting, because every discussion was a learning opportunity.
And then the market changed, and so did my perspective. When the market crashed in 2008, I was a tiny boutique that could sustain almost any setback because, as I often joked when talking with friends, I didn't have any money to lose. 2022 was altogether different. A higher profile brand not only has more to lose when the tide recedes, it is also a bigger target for competitors.
My agents — trained, ethical Realtors in a winning culture — have always been a juicy recruiting target. But we had the feel of a nice small family-run shop and the digital arsenal of much larger brands, which kept our attrition cartoonishly low over the years. That changed in late 2022 when, as mortgage rates rose and the overheated market cooled, agents tearfully resigned because they were being offered signing bonuses they couldn't decline, and that I couldn't match.
For the first time ever, I was looking at a contraction. When growth has been the main tool one uses to outrun mistakes and setbacks, contraction introduces a new kind of existential insomnia, and it was time for me to consider what had previously been unthinkable: retiring the J. Philip Real Estate brand.