Sherin and Lodgen LLP was asked to structure a sound yet creative transaction, allowing its client – a partnership of real estate professionals in the high-end segment of a major metropolitan market – to repurchase a residential real estate brokerage it sold 10 year ago to a financial-services conglomerate that in 2009 decided to divest its real estate operations.
The brokerage was among the assets that recently were bought by a residential real estate franchise operation headquartered outside the United States. The franchise operation offered the brokerage to Sherin and Lodgen’s clients as part of a strategy to shrink its balance sheet while strategically extending its franchise operations in major markets in the United States.
Sherin and Lodgen laid out a strategy that included the goals of:
- Negotiating a purchase price and payment structure that would not strain their client’s earnings and cash flow in ensuing years, particularly in the first few years, when conditions in the client’s markets were expected to be most challenging and uncertain;
- creating a financial relationship with maximum financial flexibility and tax deductibility, and;
- forging a franchise agreement that would allow for the retention of their client’s locally-focused, agile management culture while leveraging selected back-office capabilities offered by the international franchise operation.