Braun Co. Launches Exchange For Minority, Partnership Stakes
April 4, 2016 – Sherry Hsieh – Direct Link
Braun Co., an international brokerage, auctions, valuations, partnership interests, advisory and acquisitions company, has launched the Minority Interest Market Exchange (MIMX) to handle the sale of minority and partnership interests in commercial real estate. The first of its kind platform, geared toward investors wishing to exit early a partnership or minority interest in commercial real estate, includes the sale of interests including general partnerships, limited partnerships, limited liability corporations, tenant in common and more.
“We are a valuation company and we have been selling partnership and minority interests in commercial real estate since 2009. And what we’ve found is that it’s a very inefficient market for the seller,” said Todd Wohl, a partner at Braun. There are few buyers willing to purchase fractional interest in a property and while undivided minority interests in real estate are not rare, the sale of these interests by themselves or separate from the sale of the entire property is challenging because of marketability, liquidity, acceptability as collateral and denomination, he added.
“The challenge was that sellers [of minority interest] have no options. They cannot access the public market to get the best buyer pool. We look at ourselves as Uber in making a market of minority interest: to help create a fair market from what wasn’t there,” Wohl further iterated.
There is a particular emphasis on customization to maximize sale value. In addition to a sizable database of buyers and investor, MIMX has a mix of sales platforms that include a traditional sale platform, auction or a customizable hybrid mix.
Braun created the platform last year in response to client demand. “We’ve found that most people go into a partnership [investing in minority interests] without thinking about the exit strategy. But all partnerships by nature ends, for the good or the bad, and MIMX provides that needed exit,” he added.
Indeed, Wohl pointed out MIMX can still market minority interests even if the general partner evokes right of first refusal. “Sometimes the GP tries to buy the [minority] interests at a discount. But the right of first refusal is a right to buy at a price, and I say let the market decide what that price will be,” he voiced. Commonly seen in joint venture situations, a right of first refusal grants the partner(s) the right to be the first to buy out the stakes held by other partners.
The company projects slow and organic growth. Fees range from 3% to 10%, depending on the size of the interest and other variables.