Compass CEO Robert Reffkin’s promises for his firm to be a disruptor have come to pass.
Reffkin has talked at length in recent years about changing the residential real estate landscape. He’s pushed Compass’ private exclusives platform, setting the stage for a war with Zillow. The firm has executed a streak of acquisitions; shocking the industry last year with a $444 million deal for @properties and Christie’s International Real Estate.
Now, Compass is set to acquire Anywhere Real Estate, the second biggest brokerage firm and the parent company of rivals Century 21, Coldwell Banker, Corcoran and Sotheby’s International Realty.
The announcement made a splash early Monday, sending Anywhere’s stock soaring and sparking predictions of regulatory challenges from industry insiders. But Compass is playing the long game in its bet to boost its private network in exchange for a hefty amount of debt.
The deal, which is slated to close in 2026, won’t be without its challenges. Here’s what the acquisition could mean for the industry:
Big deal, bigger debt
The complexity and financial implications of the deal for Anywhere outstrip anything Compass has taken on in recent years, when it has targeted smaller, private firms.
Earlier this year, the brokerage reportedly nearing an acquisition of Berkshire Hathaway Home Services. That never materialized despite “advanced talks,” but industry experts questioned how Compass would pull off a deal of that size. Despite over $2 billion in revenue in the second quarter, Compass had just $177 million in cash and more than $250 million available in revolving credit.
Compass’ acquisition of Anywhere doesn’t tap those resources. Instead, Compass will issue roughly 175 million in new shares, valuing Anywhere’s equity at roughly $1.6 billion.
Compass is also taking on Anywhere’s $2.8 billion in debt. That debt has weighed on the conglomerate’s balance sheet for years
Reffkin said reducing that debt, which includes tranches of senior secured notes, will take precedence.
“I would like to be clear that paying down debt will be the priority,” Reffkin said. “You will see us bringing the same maniacal focus we brought to lowering our [operating expenses] from an annualized run rate of $1.5 billion to $850 million to now focus on the lowering of leverage ratio.”
Compass plans to pay off Anywhere’s $600 million revolving credit facility at closing with a $750 million bridge loan provided by Morgan Stanley.
As a result of the purchase, Compass’ shareholders will own 78 percent of the new entity. Reffkin is betting that the cost synergies, expanded agent count and ancillary services will more than offset the dilution his shareholders will face.
Compass, which carried only $50 million in corporate debt at the end of the second quarter that it has since paid off, will at the same time need to navigate the added pressure on its margins from the debt service coming onto its books. In the second quarter this year, Anywhere made $36 million in interest payments.
The combined entity will have a debt-to-earnings ratio of over four — down from Anywhere’s ratio of over seven, but well above Compass’ goal of 1.5 by 2028.
It’s an “aggressive goal,” according to chief financial officer Scott Wahlers. But it’s one he believes is “achievable based on the estimated EBITDA and free cash flow of the combined businesses,” he said on Monday.
A Compass platform?
The announcement ramps up Compass’ ability to deliver on the platform it’s promised.
Reffkin said in an earnings call last year the company’s goal is to become too big to ignore.
“Compass agents and Compass.com have more inventory than third-party sites… if you aren’t working with Compass agents or aren’t searching Compass, you are not seeing all the inventory,” Reffkin said.
But it was not clear at the time how he would make this happen.
The deal, which will add Anywhere’s more than 300,000 agents worldwide to Compass’ more than 30,000 agents, does just that. Reffkin said the combined firm will result in a better and simpler experience for sellers, buyers and agents.
Beyond creating a boast-worthy backend for the company, the deal would also create an inventory juggernaut for Compass. The combined entity, which would total $414 billion in transaction volume according to RealTrends, would be larger than the next five brokerages combined, which account for $398 billion and include juggernauts like eXp Realty and Douglas Elliman.
Industry players have previously pushed back on Compass’ effort to build a library of exclusive inventory as part of its listing marketing strategy. Zillow has tried to hold any growth in private listings at bay by threatening to ban them from eventually being published on its platform, which reported an average of 243 million unique monthly visitors in the second quarter.
Compass sued Zillow over this policy in June, accusing it of “anticompetitive tactics.”
“Zillow is an unfriendly place for home listings, which is one of the reasons home sellers have welcomed Compass’s strategy,” the brokerage said in the complaint.
Compass sought to chip away at Zillow’s dominance when it announced that it would make all of its private listings, which it dubs “Private Exclusives” and are typically only available to buyers working with a Compass agent, accessible to other brokerages and MLSes given they do not publish them to sites like Zillow.
That option could grow more appealing to buyers and agents with Compass, Corcoran or Sotheby’s International Realty under the same umbrella.
Buying the competition
Zillow is also potentially losing out on a recent convert, if a tepid one, in its ranks for listing transparency. Anywhere CEO Ryan Schneider, said in the company’s first quarter earnings call he was “leaning into” the “broad distribution of listings.”
Later this year, Schneider emphasized that the company was still prepared “for a defensive play if the world does go more toward private listings.”
Coldwell Banker Realty CEO Kamini Lane has been more outspoken in her opposition to private listings, writing in July that “Certain large real estate brokerages are pushing sellers to begin listing their properties privately, claiming that it’s advantageous to the marketing strategy — despite what the basic logic of supply and demand might tell us.”
Beyond private listings is the question of what will happen to the distinct brands that operate under the Anywhere umbrella. Schneider addressed Corcoran agents in an email Monday morning, saying the deal wouldn’t affect the firm’s brand, operations or financial arrangements, citing the press release from the companies announcing the news.
“Today is the first day of a long and complex process in partnership with Compass,” Schneider wrote. “I will be sharing new developments and details as they become available, and will make every effort to answer your questions to the fullest extent possible.”
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