Broker network head hints at consolidation

Broker network head hints at consolidation

Broker network head hints at consolidation More consolidation is coming, according to one network head who has already received offers of his own.

“Within the industry I think there is going to be more consolidation as time goes on,” Ron De Silva, CEO of RMAI Financial Group, told “Yes, I have been approached. We’ve danced and I’m not averse to looking at that; however, the organization still holds a lot of growth opportunities within.

“If I’m going to sell today, I’d require a premium to what has transpired so far.”

Consolidation is nothing new to the industry.

“We’ve got one organization that with several acquisitions have created some critical mass for themselves and some others will look to do that as well.”

That organization, of course, is Dominion Lending Centres, which purchased competitor Mortgage Architects in late 2015. DLC also made headlines in 2013 when it acquired the Mortgage Centre – another major broker network.

The latest deal is one De Silva argues sets a precedent for future consolidation within the industry.

“Gary paid $10 million for (a company that does) $8 billion (in sales). So that’s $1.25 million per billion. Given where we’re at, that brings us to just over $2 million,” De Silva said. “Our sales are $1.6 billion. Once you multiply that by 1.25 it comes to $2 million (in purchase price). That’s not a lot of money in the scheme of things once you split it with your partners and pay your taxes.” contacted DLC to confirm those numbers but, due to the terms of the transaction, the company could not disclose actual figures.

“The terms of the agreement state that neither party will publicly discuss the financial terms of the transaction,” Dave Teixeira, VP of marketing, public relations, and communications, told “We of course will be honouring that agreement.”

However, while De Silva says he isn’t ready to sell the company, it is something he would consider in the future. That or, perhaps, a merger.

“Say we’ve achieved a $5 billion sales volue and we can expect to make a $7 million said. I’d say that looks good,” De Silva said. “Or at that point in time, maybe we would consider merging to create something that would then be an entity that is $15-$20 billion.”