Retention in the Face of Acquisition – Part 1



The prospect of acquiring a property management business is very exciting.

The hard part comes when the deal is done. How can you handle the baggage that comes with a book of business? How do you protect yourself from the potential loss of owners and employees?

Our guest on today’s podcast has personal experience with this. We are welcoming Kathleen Richards, also known as The Property Management Coach. She’s also the brain behind PM Made Easy.

There’s so much to talk about with Kathleen that this is a two-part podcast. Let’s jump into the first discussion.

Acquiring a Property Management Company: How Kathleen Did It

If you’re not aware, before she became The Property Management Coach, Kathleen was a successful property management business owner. She did not start from scratch. In fact, she acquired Portola Property Management before it was even called that. The company she bought was an established business with a decent door count.

Owners did not know that Kathleen had acquired the company right away; she was introduced as a new property manager. It was rolled out as the former owner being semi-retired and pursuing other things.

Kathleen took a few immediate steps:

* She sent out an email introducing herself. She explained she was excited to be part of the team and shared her background and experience.

* She invited any owners to call her directly with questions.

* She began calling owners and personally introducing herself to them.

This portfolio had a lot of clients who had been with the company for 30 years. They were older and the internet in 2005 was not what it is today. These personal phone calls were necessary (We didn’t even have smartphones then).

At the beginning of her ownership, Kathleen did not make any changes to the way the business was run. Continuity was important.

Acquisitions and Employees

The person Kathleen bought the business from did not tell his employees there would be a new owner. The secretive nature of the transition made things difficult. She was introduced to the staff as the new owner, and there was some stress.

Kathleen reassured them quickly. In the first week, she let the part-time leasing agent go because that employee had been lying to owners.

The company was structured as a real estate office with a property management division. There were four property managers, each with their own portfolio of business. Most of them were Realtors. One person was a full-time property manager. There was also a full-time assistant who was very valuable to Kathleen as she took over. They discussed her career goals, found money for a pay increase, and Kathleen supported this employee in getting her license and moving forward with the work she wanted to do within the company. This employee knew the owners. She knew how things worked. It was important to keep her on board.

Before buying the business, due diligence was essential. An outside CPA was brought in to look at the books. Kathleen looked at the properties on paper and drove by the homes.

It’s a different situation when you only have a couple of employees. But, even if there are 20 employees, you have to approach the business you are buying with excitement. Take time to talk to each individual employee. Reassure them as a group that you’re going to look to them because they’re the experts.

Cultural fit is critical. If you’re buying the business as your starting point, you have more space to keep things as they are. If you’re buying the business and incorporating that busi...