Room at the top.

Room at the top

Some might say buying a real estate brokerage firm in times like these is akin to jumping from an airplane with a lead parachute.

But George Rathman says he's sailing smoothly since buying the nation's largest independent residential brokerage firm three months

"There's plenty of money to be made in this business," proclaims Rathman, chairman, chief executive and largest stakeholder of The Prudential California Realty. "California's the best place to be, too. It has all the elements of supply and demand, and the fastest job-growth projections of any place in the country."

Rathman, a fit 49-year-old Harvard grad, and six of his long-time associates finalized their purchase of Prudential's 84 California brokerage offices in September, after more than a year of negotiations.

"The market kept getting weaker and weaker," Rathman explains, "we wanted to make sure the deal was structured in a way that would put us on strong financial ground. If we'd bought this company two years ago, or even a year ago, we'd be in a lot different position today."

The position that Rathman's firm is in these days is No. 1 in the country, according to the most recent issue of National Relocation and Real Estate magazine.

With $8.53 billion in annual sales, the firm is comfortably ahead of its closest rival, Schlott Holding Co. Inc., which had sales of $7.58 billion.

That comparison becomes even more dramatic when looking at per-office sales. The Prudential California Realty's 84 offices had average per-office sales of $101.6 million, nearly twice Schlott's per-office sales of $54.1 million.

Rathman attributes that success to his firm's focus on upscale California communities and its strong management team.

"I've surrounded myself with a group of strong, diversified people, most of whom I've worked with for nearly 10 years now," he says in a very deliberate, controlled voice. "You don't build long-term success in this market by yourself."

Rathman and all six of his partners are former executives of now-merged Merrill Lynch Realty.

That 400-office brokerage was sold by Merrill Lynch, Pierce Fenner & Smith last year to The Prudential Insurance Co. of America.

The Prudential turned around and put its newly acquired brokerage business on the auction block less than a year later. The Prudential had transacted the deal primarily to get its hands on Merrill Lynch's profitable corporate relocation business.

Rathman quickly hand-picked six long-time associates as partners and bought the network's 84-office California region a year later.

Rathman's team members confirm that they are loyal and a close-knit group, meeting at least once a month to discuss problems, ideas and strategies.

But not all former Merrill Lynch execs are singing Rathman's praises these days. A sizable group of the firm's former top-ranking officers, now scattered across the country, had some very unflattering things to say about their former boss.

None would speak on the record, or give specific details about the actions that led to their intense disdain for Rathman.

But the hard feelings are deep and apparently began in 1986 when Rathman was transferred, or transferred himself, to the firm's Century City office from corporate headquarters in Connecticut.

"He muscled (John) Greenleaf out and gave himself a bunch of self-serving breaks at the expense of others," claimed one former high-ranking colleague. "That man is not qualified in any way for the job he has."

Greenleaf, who was Merrill Lynch Realty's western region president until the mid-1980s, refused to elaborate on his past dealings with Rathman.

"Anything I'd have to say about George Rathman, you wouldn't want in print," he sad. "It'd end up in a defamation of character suit, or libel."

Greenleaf now manages Jon Douglas Co.'s Santa Monica office.

Other former key Merrill Lynch execs -- Elliott Fineman, William Szilagyi and Keith Berry -- all said they were precluded from commenting about Rathman under terms of "lucrative" out-of-court settlements paid to them by Merrill Lynch.

Others who worked closely with these three former executives, but not directly with Rathman, however, confirmed that dislike for Rathman was widespread.

"I had no direct dealings with Rathman, but everything I heard about him was negative," remembers Joe Carnahan, former partner of Paul-White-Carnahan Realty Co., a 21-office San Fernando Valley brokerage that Merrill Lynch Realty bought in 1980. Carnahan, who is now retired, stayed on with Merrill Lynch for five years after selling out to it.

"People all said that Rathman didn't know his butt from second base about real estate, and that he was imposing management processes on them that didn't have anything to do with real estate," Carnahan says.

Rathman, clearly concerned that revelations had surfaced about his past confrontations, took a few hours to contemplate a response.

He then explained that his former colleagues' comments are a classic case of sour grapes.

"The key to success is to build a strong team around yourself," he explains. "For one reason or another, the people who aren't here any more are people who didn't fit in with the team. And anyone who has left this company, having seen what it has now become, has got to have some regrets. There's a lot of envy out there."

Rathman further explained such illfeelings are just another cost of doing business.

"Real estate is a tough business," he sighs. "If you get to my position without at least a few people being unhappy with you, then you aren't making the tough decisions."

While Rathman may indeed be capable of making the tough decisions, don't expect to see his name emblazoned on the company any time soon. He says he does not aspire to the self-promoting ways of Fred Sands or Jon Douglas.

"I'm not out for personal glory in this deal," insists Rathman, his starched, white oxford shirt looking fresh despite the late afternoon hour, black loafers gleaming. "This firm will never be 'George Rathman Realty.'"

Maybe not. But Rathman, who grew up in Toluca Lake, clearly seems to be enjoying being his own boss for the first time in his career.

After getting his MBA from Harvard, Rathman went to work for Uncle Sam at the Pentagon. He then took a job in Los Angeles as a systems consultant with the accounting firm Arthur Anderson & Co.

Getting a CPA certificate through night-time studies, Rathman accepted the post of controller for Ticor Title Insurance Co., and later headed that company's corporate relocation business. That Ticor subsidiary was bought by Merrill Lynch in 1977, which eventually led to Rathman working his way free from the confines of corporate America.

"I used to start my year with half my calendar already filled," remembers the father of three young girls. "But this year, when that Christmas school pageant comes, I'll be there -- not in New York presenting my quarterly budget."

Despite his new-found freedom, Rathman says he still rises at 5:30 a.m. and jogs about 20 miles a week before putting in a full day's work, not getting home until about 7 p.m.

But he's spending more time with his family now, much of that at their newly purchased weekend home in Montecito. And semi-annual ski trips to Utah and Colorado are on the family's drawing board, he says.