Compass denies that it has been approached to take the company private as part of a deal with private equity firm Vista Equity Partners.
According to a report from Business Insider published Wednesday evening, three unnamed sources claimed that Vista Equity Partners is exploring a deal to take Compass private. Business Insider reported that, per sources, another private-equity firm could also be involved in the deal, which might include a property technology startup to bolster Compass’s digital offerings.
A Compass spokesperson denied that any talks have occurred, telling The Real Deal: “no private-equity firm has contacted Compass expressing any interest in taking the company private.”
Vista Equity Partners declined to comment to Business Insider.
If a sale was to occur, Compass’s CEO Robert Reffkin would have to approve a deal as he controls roughly half of the voting power of the firm.
Compass raised $450 million in its New York Stock Exchange debut in April 2021, reaching a market capitalization of $8 billion on its first day of trading. Since then, its stock has dropped more than 85% and the brokerage is currently valued at just over $1 billion. The company has lost nearly $800 million over the last 18 months.
Compass’s share surged 11.4 percent during after-hours trading after news of the deal to take it private broke.
In addition, Compass has undergone three rounds of layoffs in the past five months, including the firing of the firm’s chief technology officer Joseph Sirosh, whom the brokerage does not intend to replace.
During the second quarter of 2022, Compass lost $101 million. The firm attributed the net loss to “higher expenses related to strategic business initiatives, non-cash stock compensation, depreciation and amortization as well as restructuring charges due to the cost-saving actions announced on June 14.” The brokerage’s largest expense was for “commissions and other related expenses,” which came in at $1.62 billion.
The company plans to cut its expenses by $320 million this year.
Despite its financial struggles, Compass is a prolific real estate brokerage. The New York-based firm ranked as the No. 1 brokerage in the country by sales volume in the 2021 RealTrends 500 rankings, recording $251.02 billion in sales volume and 224,067 transaction sides.