So here’s my take on the news being announced today.
Management buy-out
LPS Real Estate Group has been split in two. The MLS side, responsible for the Paragon MLS system will still be part of LPS. The franchise/broker and agent products division has been bought out by current managers Jay Gaskill, John Hensley, Prem Luthra and Mike Kovar. This new entity is now dubbed Real Estate Digital. RED for short (love the new logo too!).
Think of RED as a startup but all ready generating tons of revenue. From my understanding RED is well funded and the new owners are pumped up and ready to roll.
MLS Division
In regard to the MLS division I see this gives them a ton of more focus on delivering their current product and services while expanding. LPS knows they have a great asset and doesn’t want to lose it.
The Industry
I don’t see any real parallels to CoreLogic‘s recent news. Their motivations are purely on a “maximizing share holder value” vein. Rumors are also swirling about another MLS vendor looking for a buyer and a deal may be announced soon. Consolidation? Maybe. Time will tell.
But this play is about 4 guys taking the bull by the horns and going for it. Jay, John, Prem and Mike think they can do better, and they are putting their own money, and reputations on the line to prove it.
The Future
To me the franchise/broker and agent products divisions was too messy for LPS to deal with. LPS has bigger problems to solve. I see RED acting more from a consultive side to help franchisors and brokers generate revenue. I also think this change will be welcome from the new owners perspective. In the past they needed to serve many masters, LPS corporate, the MLS division, franchise/broker/agent products and all the customers associated with them. Shedding LPS corporate and MLS will allow them greater focus.
Challenges
Change always freaks people out. So they will have deal with that, from a existing customers and more importantly from a employee side. John Hensley’s core team has been with him for 10+ years, and several company acronyms, so hopefully that won’t be a problem.
On the product side you have a monster platform with their associated rDesk products. That has many advantages, but also challenges. How quickly will they be able to roll out new products? How do their existing products fit into these new business models they want to roll out to franchisors and brokers?
Final Thoughts
I have to say the thing I love about this announcement is about 4 men taking a stand. Some in the industry are hunkering down, timid, a “batting down the hatches” mentality. Jay, John, Prem and Mike are on deck, looking forward, ready for the journey. I find it just damn inspiring.
As Teddy Roosevelt once said…
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat. ”
Got get ’em boys!!!
And so the other major data provider follows the same path by spinning off a division to appease shareholders and ……zzzzzzzzzzzzzzzzzzzzz.
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I think this is great news. The RED team now has more direct control over the work that they do, and where they can invest for the future. Big corporate parents can be a blessing, but they can also hamper growth and innovation.
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