When Tony Ciepiel led Realty One Inc.’s acquisition of Douglas Elliman in the mid-90s, it marked a watershed moment in the evolution of New York City real estate.
“It was a paradigm shift in the industry,” Ciepiel says. “Back then, real estate companies just focused on brokerage. If you talked to a major brokerage in this country at that time and you asked who their customer was, they would have said the realtor. They wouldn’t have said buyers and sellers.”
At the time, Realty One was Ohio’s largest residential brokerage and the eighth largest real estate company in the country.
“We were one of the companies that pioneered mortgage banking, title, escrow, warranty and relocation services as a bundle,” Ciepiel says. “The opportunity was to take that model and apply it to Douglas Elliman. It changed the landscape of New York real estate, which is a pretty important market. In a very short period of time, one third of our customers were utilizing our mortgage affiliate, one third were using our title affiliate. We could offer customers a seamless transaction.”
It was just one stop on what Ciepiel describes as his “eclectic” journey through business leadership and dealmaking. He pioneered e-commerce in the real estate sector at Realty One, spent time at Griswold Inc., The Flood Co. and most recently, Vitamix. As COO, he led the blender manufacturer to develop new products and expand distribution that resulted in more than 400 percent growth over a five-year period.
In April, he left Vitamix to become CEO at Step2Discovery. While the Step2 brand is well-known to people in Northeast Ohio as a manufacturer of durable toys for children, the company has recently taken steps to broaden its reach. Aterian Investment Partners bought the company in October 2016, and has followed that acquisition with deals to buy Pittsburg, Kansas-based Backyard Discovery and Chicago-based Go Configure It.
Ciepiel believes his dealmaking experience across both the financial industry and consumer products will be pivotal as the company looks to continue to strengthen its core market while also expanding into new ventures.
In this week’s Master Dealmakers, Ciepiel talks about his strategic approach to dealmaking and the importance of reaching beyond M&A as a means of completing deals that can benefit your business.
Make deals for the right reason
Deals made simply as financial purchases that are nonstrategic never seem to turn out the way you think.I believe one of the fundamentals to doing a deal is to find a strategic benefit. We’re going to gain distribution. We’re going to complement different types of products. We’re going to strengthen this area of our business.
I’ve had the privilege of selling great brands, which is good preparation and experience for what Aeterian does.They are looking at companies every single day. Part of what they are looking at is what else could be added to the Step2 Discovery Group that could create more synergy. We have looked at a couple of opportunities and we’ll continue to look at additional opportunities where they make sense.
You want a deal that is going to lead to some type of strategic advantage or competitive advantage that is going to help you grow the company.Doing a deal strictly for economic value, I’m sure that there are those types of transactions out there that work. But I tend to focus on the ones that have strategic value, ones that are going to create a competitive advantage, ones that are going to create synergy that is clearly identifiable and easily attained.
When I was at Realty One and we purchased Douglas Elliman, we were able to build out a service that created a much more consumer-oriented and service-oriented organization in the real estate market. That’s a good example of doing an acquisition based on an opportunity to capitalize on competitive and strategic advantages that you’ve identified.
Think beyond buying and selling
You often think about dealmaking in terms of an M&A transaction.But there are a lot of deals that get done by CEOs with other CEOs of companies that are strategic alliances. It could even be a competitor where you’re selling intel into their product and their product is competing with one of your products.
There are all kinds of deals out there to be had.In today’s environment, speed is really important and you need to be ready to act when an opportunity arises. We have a strategic relationship with a company called BoxLock. BoxLock is a lock that fits onto a delivery bin. When the delivery person comes up to it, he scans it, it unlocks the lock and he can put the parcel in the bin. It sends you a message that your package was just delivered. As a leader, I’m always looking at different ways I can partner with companies that can bring technology or bring distribution or do something that will cause our company to advance faster.
The Last Word
It’s really important to always be looking for new opportunities.As a leader, you have to be looking out at your competition, how your market is moving and how channels of distribution are changing. Look at Toys R Us. When you have one of your largest customers go under, if you don’t have a clear response plan, you’re going to have challenges. Looking at an acquisition that can create strategic moves for you and your business is very important.
How to reach: Step2Discovery, www.step2.com