December 16th, 2011
Some CRE firms expand to buying, selling companies
By Burl Gilyard, Finance & Commerce
Posted Tuesday, March 8, 2011
As the commercial real estate industry continues to work through the toughest market in decades, some companies are going for brokerage: business brokerage. The business of buying and selling businesses is not a typical service handled by most local commercial real estate companies. But Jeffrey Larson, president of Eagan-based JBL Cos., said his company is planning to start offering business brokerage services aimed at restaurant properties starting April 1.
“From my standpoint, I think the economy is driving the brokerage business to find deals where they can,” Larson said. Larson said the concept emerged after more clients wanted help with both their businesses and their real estate. “We’re actually going to have a restaurant/hospitality group,” Larson said. “We’re going to be launching a brokerage and consulting group.”
Meanwhile, Minneapolis-based Coldwell Banker Commercial Griffin Cos. recently added Michael Palm Sr. as senior vice president of its newly created business brokerage group, which will be part of the company’s sales and leasing division. A statement from the company touted Palm’s extensive experience in running and selling private businesses. William Ostlund, president of Coldwell Banker Commercial Griffin Cos., could not be reached for comment.
As the economy has battered many commercial real estate owners, many companies have expanded their services for managing troubled properties.
Larson said his special asset division is already doing work beyond dealing with distressed real estate. He estimated that the company’s special asset group is doing 60 percent of its work on real estate and 40 percent on “business operations, business turnaround [and] business management.” “We do a lot of business turnaround,” he said. “We actually get hired by companies now to do their budgeting.”
For Larson, offering some business brokerage services seems like a natural extension of the work that his company is already doing.
A representative of the Chicago-based International Business Brokers Association (IBBA) said it is not unprecedented for commercial real estate companies to get into business brokerage.
“It’s not totally uncommon. The market has been so poor for everybody. … I think it’s really just a reaction to there not being enough business out there,” said Sean Samet, director of the M&A Source, a subgroup of the IBBA.
But Gary Johnson, president of the Edina-based Calhoun Cos., a business brokerage with about 20 agents, said he does not see much overlap. (Palm worked for Calhoun Cos. for two years before joining Coldwell Banker Commercial Griffin Cos.)
“Nationally, it’s probably not any kind of trend. Most business brokerage companies are separate from commercial and residential real estate companies,” Johnson said. “It is a different business than trying to sell commercial real estate. … The process is quite a bit different. I don’t see a lot of crossover that way.”
But Calhoun Cos. does handle some commercial real estate in connection with business sales. “We do a little bit of commercial real estate,” Johnson said. “Sometimes businesses own real estate and sometimes they don’t.”
Typically, Johnson says the properties that his company deals with would be smaller retail, warehouse, manufacturing or automotive-related properties. Johnson said the business brokerage trade, like the commercial real estate industry, is starting to pick up after some sluggish years. “The last couple years, small businesses have not been doing real well. A lot of business owners have postponed putting their businesses on the market. That seems to be changing now,” Johnson said.