Michael Sheinkop, president, brokerage recruiting and acquisitions at NKF
NEW YORK CITY—Newmark Group which operates Newmark Knight Frank recently closed on its acquisition of MLG Commercial, a Wisconsin brokerage and property management company with 18 brokers in an office in Milwaukee and two brokers in an office in Madison. Although NKF declined to provide the amount paid for the acquisition, it notes that last year MLG completed nearly 400 transactions for a total value of nearly $250 million.
“It's no secret that Newmark was a smaller company eight years ago and that we are now this much larger is solely a function of M&A and recruiting,” Michael Sheinkop, president, brokerage recruiting and acquisitions at NKF, tells GlobeSt.com. The company has acquired 16 companies since 2017. “And you don't just recruit on the coasts. You recruit at all the financial epicenters and centers of excellence around the country.”
Media attention often shines on CEO Barry Gosin and chairman of retail leasing division Robert K. Futterman, both in New York. But Sheinkop says the Midwest has strong fundamentals and dynamics throughout all the property classes. He points out that Newmark has been acquiring in the Midwest since 2012. Getting a foothold in Wisconsin with the MLG platform was a way to bolster their presence in the state. This expansion strategy has included picking up Midwest offices in Cleveland, Cincinnati and Columbus, among others.
Sheinkop says “Chicago's a hub and there's a great synergy with Milwaukee which is just an hour north. There's a particularly strong corporate base in Milwaukee.” But that was a city where NKF did not have dedicated resources. There are several universities in the Madison area, most notably the University of Wisconsin-Madison. This aligns well with the tech hubs in Chicago. This is another example of why it also behooved NKF to extend into that market as well.
He describes smaller firms as having quality, exceptional income “because nobody feeds them.” Sheinkop adds, “They have to go out and grind it every day on the street to win business. We love local boutiques because they often times don't get what I would call 'network business' where we generate network business and pass it out.” Smaller companies need to have their own boots-on-the-ground strength of their own brand.
On the other side, post-acquisition, MLG will reap the benefits of using NKF's platform and reputation, according to Sheinkop. He states the smaller firms appreciate the standard that comes with a firm of NKF's stature which provides a greater level of credibility.
But above all a compatible culture is critical for a deal to happen.
He describes one example of a cultural clash would be if the firm did not embrace the notion that NKF is a full-service organization. For example, some companies identify as being strictly tenant reps. “If they don't aspire to accept that they're going to be able to grow their business beyond just tenant rep with other relationships, then we'll never get to a sale because they're not going to see the value in joining the platform.”
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Betsy Kim
Betsy Kim was the bureau chief, East Coast, and New York City reporter for Real Estate Forum and GlobeSt.com. As a lawyer and journalist, Betsy has worked as the director of editorial and content for LexisNexis Lawyers.com, a TV/multi-media journalist for NBC and CBS affiliated TV stations in the Midwest, and an associate producer at Court TV.
