The company appears to be deploying an initial public offering strategy rather than going public through a special purpose acquisition company. Here’s what we know so far.
The company appears to be going the initial public offering (IPO) route, filing an S-1 document with the SEC, rather than merging with a special purpose acquisition company (SPAC) that’s already publicly traded.
The number of shares the company will offer and the price range for the proposed offering have yet to be determined, according to the statement. The IPO is “expected to take place after the SEC completes its review process, subject to market and other conditions.”
Compass’s public debut has long been the subject of rumors in the real estate industry. In recent months, the company has bolstered its board of directors and reportedly tapped banks to underwrite the IPO process. In an email memo sent to agents and employees late last year, Compass CEO Robert Reffkin outlined how the IPO could benefit agents.
The announcement also follows the successful public debuts of two other SoftBank Vision Fund-backed technology companies. Opendoor made its public debut late last month via a merger and SPAC and DoorDash, which also netted SoftBank billions, went public via an IPO.
Compass was last valued at $6.4 billion, when it raised $370 million, with SoftBank leading the way, in July 2019.
The S-1 filing is still confidential at this early stage, but will likely give potential investors and the general public its first look into the finances of the ever-growing real estate company. Compass has grown aggressively over the years through major acquisitions, which has led to speculation that the company will struggle to be profitable.
Financial scrutiny on the heels of an S-1 file is partially what led to WeWork — another SoftBank backed firm — shelving plans for an IPO.
The macro-environment is much different right now, however, with the tailwinds of the COVID-19 pandemic leading to a strong housing market. Rivals like Realogy, Keller Williams, eXp Realty, Zillow and others have all enjoyed record-setting years, turning big profits and see revenues explode.
In the early days of the pandemic, Compass joined others in enacting large-scale layoffs, before the market rebounded sharply. The company, in late March, laid off 15 percent of its staff — which was roughly 375 employees.
The company is also currently fighting-off a lawsuit from rival Realogy, the parent company of some of the industry’s biggest real estate brands, including Coldwell Banker and Corcoran.
Justin Malonson is the Founder of LyfeLoop a 16+ year tech innovator, investigative media researcher and host of the Freedom Not Control Podcast live on Voice America. Justin is a highly sought-after tech entrepreneur, industry speaker and winner of the coveted Business Achievement Awards “Top Digital Marketer” award. With 16+ years of demanding experience, Justin has worked with over 3,000 businesses including amazing clients such as Blue Cross Blue Shield Association, Sotheby’s International Realty, Duke University, White House Black Market,Tiffin Motorhomes, Bass Pro Shops and Beazer Homes USA.