Walker & Dunlop Deep Dive

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As a 60+ year old, small, family-owned business with just a few dozen employees and a valuation of just ~$25mn, Walker & Dunlop could have lingered as a middling business were it not for a savvy and ambitious leader—who also happened to be a 3rd generation heir.

The usual cliché of the third generation in a family business is that they are the ones to run the company into the ground. However, Willy Walker took Walker & Dunlop to new heights. He grew revenues at a high teens CAGR for almost two decades, from tens of millions of dollars to over $1.2bn, despite competing against large financial institutions like Wells Fargo and large real estate brokers like CBRE.

Originally operating in the esoteric and niche field of facilitating Fannie Mae financing for commercial real estate borrowers, Willy Walker was quick to identify their business as being essentially commoditized. To improve their weak competitive position, they focused on improving service levels to be the #1 Fannie Mae lender while simultaneously diversifying their product offerings. While competitors focused on getting big, Walker & Dunlop was focused on being the best and went after higher quality revenue streams like their loan servicing portfolio with contractual recurring fees and a budding investment management business.

Having grown the business to ~$250mn in operating earnings, Walker & Dunlop was valued at just over $5bn in 2022—200x what it was when Willy took over. However, a soft real estate market has since driven the stock down ~45% from its peak. Despite the weaker macro backdrop, Walker & Dunlop has maintained their ambitious 2025 financial targets that they originally issued in 2020. Success could mean the company trades at 7-10x 2025 owner earnings for a business that has a long history of growing double digits and margins that average ~30%. However, it is not without risks—and no one in this industry has deep moats.

You can find the following and more in our report:

  1. Business History.
    • Business Background.
    • Grabbing the Reins.
    • What’s a Walker & Dunlop?
  2. Business.
  3. Industry.
    • GSEs.
    • Competition.
  4. Expanding the Business.
  5. Walker & Dunlop Model.
  6. Revenue Build.
  7. Valuation.
  8. Risks.
  9. Summary Model.
    • Historical Model.
  10. Conclusion.

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