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Compass eyes IPO

Rob Reffkin (Credit: Compass)

Residential real estate brokerage Compass has selected underwriters for a potential initial public offering, Bloomberg reported. The New York-based startup is working with Goldman Sachs and Morgan Stanley ahead of a listing that’s slated for 2021.

  • Questionable valuation: Realogy owns Coldwell Banker, the Corcoran Group, and Sotheby’s International Realty, and has a market cap of $1.43 billion… SoftBank’s Vision Fund led Compass’ most recent round of funding at a whopping $4.4 billion valuation.
  • Tech advantage is not evident: With unlimited resources, Compass has poached many brokers from competitors to accelerate growth. Simply incentivizing brokers to join by offering nice signing bonuses and higher commission splits is not disruptive. Consolidation is a nice strategy, but not a transformational one. The company was founded in 2012 by Ori Allon and Rob Reffkin.
  • Be Smart: The pandemic has accelerated technological shifts that were previously bubbling underneath the surface. Cloud-based residential brokerage eXp Realty (AKA eXp World Holdings) and commercial virtual brokerage KayoCloud have been the beneficiaries. The two companies provide their agents with end-to-end software that automates all back-office work. 
  • By the numbers: eXp World Holdings has seen its shares increase by over 370% this year, and now boasts a market cap of $3.66 billion. On the commercial side, KayoCloud has seen a surge in usage by 800%. To date, the venture-backed startup has facilitated over $427 million in commercial investment sales volume. [Bloomberg+Crain’s+FinLedger]

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