Formed in the late 1970s with a novel business model, The Group, Inc. has used a producer-centric business operating formula to attract and retain talented real estate agents and, as a result, became the leading real estate brokerage agency in Northern Colorado, and is the most productive real estate brokerage agency “per-broker” in the USA. At the time of its formation roughly 30 years ago, the number of business ownership options were limited. There were no limited liability companies back then, and S Corps could have only a very limited number of shareholders. As a result, The Company was formed and had remained a C Corp. Real estate assets were acquired by the C Corp and built-in gains were present.

Recently, The Group began planning for a transition from first-generation to second-generation business governance and succession management. As part of the planned transition, the Company also planned to expand its range of customer services, which would likely increase built-in C Corp gains in the future. Further, as many of the first-generation shareholders were planning to liquidate their shareholdings, as they retired, the tax effects of built-in gains would become burdensome for second-generation owners. Plus, the Company would need capital to expand and remain competitive, as it was located in one of the more attractive real estate markets in the United States.

The Company retained Source Companies, LLC as its business advisor on these matters. After a thorough analysis of the likely liquidity requirements for retiring shareholders, and the estimated economic effect of the Company’s planned service expansion, the decision was made to create a new affiliate and ownership structure. This would enable business governance and succession management, and exit planning for shareholders, while also positioning the Company to be able to attract growth capital when needed.

Since 1982, Source has assisted clients on matters relating to inter-generational ownership transfer, succession management and business governance.