Yankee Know-how

New England’s top-tier company uses public venture to fuel national ambition.

July 1, 2000

The DeWolfe Cos. Inc.
1999 transaction sides: 25,654
Rank: 10

With 1999 revenues of more than $170 million, The DeWolfe Cos. Inc. in Lexington, Mass., is a New England powerhouse that encompasses real estate brokerage, mortgage, insurance, relocation, and moving services.

The company’s growth has been fueled by dozens of acquisitions in recent years and financed by that tried-and-true tactic for increasing capital--the sale of public stocks.

DeWolfe’s 1992 venture into the world of publicly traded stocks was one of the earliest and most successful uses of such a strategy by a residential real estate company, and DeWolfe is still one of the few realty companies to have gone public. That Yankee initiative vaulted The DeWolfe Cos. Inc. (AMEX: DWL) into the position of dominant realty company in New England--and made it one of the biggest residential companies in the country, No. 10 on the Top 100 Companies list.

Last year’s 10 takeovers included J.W. Ryker Co. in Rhode Island, with 220 salespeople in 17 offices, and the Mark Stimson companies in Maine, with 150 salespeople in seven company-owned offices and 160 salespeople in 17 franchise offices.

DeWolfe’s chairman and CEO, Richard B. DeWolfe, CRB, CRS®, plans to continue acquiring real estate companies in New England and is eyeing the Midwest and Southeast as well. He has been running the company since 1974, when he purchased A.L. DeWolfe & Co., a nine-salesperson real estate brokerage founded by his mother in 1949.

“We didn’t want to use debt financing as the mechanism for growth,” DeWolfe says. “We wanted access to the public market for equity money.” The opportunity to award stock options to employees and independent contractors was a strong secondary motivation.

“We wanted a system in which every person in the company would be a shareholder,” he says. “Being a public company allows us to reward people with compensation other than wages and bonuses.” Insiders control more than 60 percent of the outstanding shares.

DeWolfe believes the company’s stock, trading in the $8 range in early May, is undervalued, particularly in comparison with prices paid for acquisition targets.

“We’ve paid a dividend the past two years. We’re an undiscovered, undervalued company,” he says. “You have to be very patient in the public arena.”

In addition to acquisitions, several other strategies are key to the company’s future, according to Paul Harrington, chief operating officer, who joined the company in 1992 after a 14-year career as a real estate and mortgage banking attorney. The first strategy is one-stop shopping, he says. DeWolfe Mortgage Services Inc., started in 1987, is now a full-service mortgage banking company, and DeWolfe Insurance Agency Inc., launched in 1998, has approximately 10,000 homeowners, life, and vehicle insurance policies in force.

Moving services were added in 1999. “We don’t have moving trucks,” Harrington says. “We coordinate and schedule the move and monitor the performance of the carriers. We check the invoices, and we handle claims issues.” Those services are free for homebuyers. The moving companies offer buyers discounts on their services and pay DeWolfe a fee to participate in the program.

DeWolfe’s technology strategy has involved a multimillion-dollar investment to upgrade hardware throughout the company, develop new software, and install a wide-area network that provides salespeople with free high-speed Internet access and e-mail capabilities.

The company’s Web site features DeWolfe Home Movies, which are full-motion videos of every home listed for sale by the company. The videos are created by company specialists.

The consumer-oriented marketing campaign was launched three years ago. “The campaign is a subtle and sophisticated approach to marketing our services to the consumer,” Harrington says. “The campaign’s homey images and messages are designed to evoke the emotional aspects of buying or selling a home.”

The campaign’s tag line: “One stop and you’re home.”

Marcie Geffner is a freelance writer based in Los Angeles.

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