Customer-centric / ‘Hoby’ Hanna looks for core values when Howard Hanna Real Estate Services pursues M&A’s

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When Howard Hanna Real Estate Services acquired Realty One in October 2008 it was a deal that made Howard Hanna the fourth largest real estate company in the nation — but as it unfolded, it also gave Howard W. “Hoby” Hanna IV, president of Howard Hanna Midwest, some daunting tasks.

The first was to take two sales forces that had competed fiercely with each other and bring them together under one roof with strong leadership.

“By three years later, we had gone from 69 to 47 offices, which was the goal number that we wanted to reach, and did that much faster than anticipated without breaking obligations,” Hanna says.  “We paid every rent we had to pay, we made every obligation we had to make, and because we just felt that was the right thing to do as a corporate citizen, but we also had to bring synergies together within our business.”

But another task was a Catch-22.

“The group would not allow us to utilize any of its accounting or CRM software because they were owned by the holding company and the group claimed it was proprietary,” Hanna says. “So we had to rebuild the CRM files and re-educate our agents to use the products we had, which was quite frustrating.”

The solution, as Hanna puts it, required some laborious tasks.

“We had to communicate that we weren’t forcing our platform on them — that their former owner didn’t allow us to have the platform,” he says. “So there was a lot of heavy lifting, moving management players and putting them in different offices, and add to that the fact that the first quarter of 2009 was probably the worst quarter in the history of real estate sales.”

When faced with multiple challenges that add a lot of stress and pressure to the organization, level heads must prevail.

“Everybody kept very cool, everybody had their eyes on the focus of bringing two great companies together in the marketplace . . . But the CRM for a significant number of agents became a morale issue,” Hanna says.

“We just had to put our arms around people and say, ‘Hey guys, we’re not causing this for you, but we’ll have a solution. We’ll work through with you. We’ll train you on what’s there.’”

You may lose some employees in an acquisition or merger who leave because they were frustrated, but at the same time those who depart may well have to learn a process like a new CRM platform wherever they go.

“We had the vast majority of folks who just said, ‘Hey, is this great, this is exciting, and there’s all these challenges with consolidation, but I’m going to move forward.’”

Here’s how Hanna focuses on solutions to the challenges of mergers and acquisitions so the transition is as smooth as possible, and customer-centric core values reign supreme.

 

Don’t take due diligence shortcuts

Hanna has seen some companies in the real estate industry and elsewhere that come in after an acquisition and want to dismantle “everything and anything” that was part of the previous organization.

That is not the way he approaches a newly acquired business.

“We haven’t said, ‘Hey, forget everything you’ve ever learned — this is who we are,’” Hanna says. “It’s more of, ‘There are great things that we can pull out of this organization and expound upon, but we also want you to learn why Howard Hanna in its own rights has had great success.’”

Howard Hanna Real Estate Services’ success now includes 167 offices across Pennsylvania, Ohio, Virginia, Michigan, New York, West Virginia, North Carolina and Maryland, many of which were acquisitions.

Home sales for Howard Hanna Real Estate Services, the No. 1 real estate company serving Pennsylvania and Ohio, hit an all-time high in 2013 of almost $10 billion. Howard Hanna has more than 5,700 sales associates, management and staff across those eight states.

In Ohio, closed sales volume was $4.4 billion for 2013, an increase of $772 million compared with 2012. There were 24,349 home sales in Ohio last year, a 16 percent increase over 2012.

When it comes to how acquisitions contribute to continuing growth and strong performance, Hanna says it all boils down to due diligence on the acquisition, communicating the company’s customer-centric core values, how quickly he can get leadership of the organization to be on board to believe in those core values and as Hanna puts it, “How well I communicate all that at the top.”

Cultural fit is foremost in the due diligence process: finding the right talents, but also people who believe in the new company’s philosophy and mission.

“That’s been the biggest challenge over the years in Cleveland specifically, as we acquired Smythe Cramer and Realty One, which were two companies that for years competed with us — it was bringing that philosophy together, and we think we’ve done a great job of bringing the best of those two cultures and people and overlaying it with the mission of Howard Hanna Real Estate Services.”