On June 14, Mrs. William B. May Jr., matron of the august William B. May real-estate family, received a gift from her son-in-law, Peter Marra: a tribute for her 84th birthday. She sent the box back unopened.
The next day found her son, William May, a director and fourth-generation member of the 138-year-old family brokerage, sitting with William Lie Zeckendorf, co-chairman of Terra Holdings, at the Chestertown Yacht Club on the Chesapeake Bay. They were there to broker a settlement deal to put his family’s company back together after Mr. May’s brother-in-law, Mr. Marra, left the firm in April to join rival Brown Harris Stevens, owned by the Zeckendorfs. His exit brought the two companies close to dueling lawsuits.
Now, the May and Zeckendorf families say they reached a preliminary settlement on June 21. But the family battle continues. The past seven weeks have laid bare a raw and often vicious struggle for the future of the Upper East Side’s real-estate éminence grise . Mr. Marra and the May family, whose longstanding independent company has sold some of Manhattan’s finest homes along the limestone corridors on the Upper East Side to pedigreed families including the Carnegies, Fricks and Vanderbilts, stood recently on the brink of an extinction of sorts. A single, if significant, defection might have pulled the company up even from its ancient roots, dating back to 17th-century England, when the family sold prized London properties to the Crown estate.
Mr. Marra, the former president of William B. May who is married to Mr. May’s sister, Leslie May Marra, ignited the feud between the two family-run real-estate empires when he sold his 12 percent stake in the May’s company to Terra Holdings and brought 22 agents with him to his new employer. Under the terms of the deal, Mr. Marra was named an executive vice president at Brown Harris Stevens and now runs the firm’s new office at 1121 Madison Avenue.
According to the May family and Mr. Marra, all communication between the two parties has been severed. The Mays say they have cut Mr. Marra and his wife out of their inheritance from the family business, with skipping trusts set up for their two children.
It has been a cautionary tale in the high-stakes, and ultra-competitive, game of the Manhattan real-estate market, which in the past three years has been reshaped by a furious spate of corporate consolidations. The few remaining independent brokerages, without the deep balance sheets of the vast holding companies that now finance Manhattan’s largest brokerages, including the Corcoran Group and Douglas Elliman, have been nervously watching while larger firms circle the sharky waters of the real-estate market looking to expand their ever-growing empires. Industry experts say it was this competitive climate that has pushed independent firms into the arms of flush investors and caused the May family business to spin out of control.
But the parties in the May family feud paint vastly different pictures of just how the company unraveled.
It was on April 29, when an article first appeared in the New York Post , that Mr. May, 43, said he first learned the news that his brother-in-law had sold his shares, totaling approximately 12 percent of the company, to Terra Holdings, New York’s largest real-estate concern, which owns both Brown Harris Stevens and Halstead Property L.L.C., with more than $3.1 billion in closed sales posted in 2002.
“He should have called my father first, rather than let my father learn about this in the bloody newspapers. There was not a peep. That’s the biggest surprise of all,” said Mr. May, a real-estate developer based in Wilmington, Del., who is building the state’s tallest tower, speaking to The Observer . “No one bothered to call-they just went ahead and did this.”
The rift in the family launched a battle for control in the privately held company that has been selling New York real-estate since 1866, and which Mr. May says is profitable, debt-free and posted, in 2003, $25 million in commissions. On April 29, when news of Mr. Marra’s decampment broke, the May family was within hours of finalizing an 18-month-long restructuring deal with the Century 21 division of Cendant-the world’s largest real-estate brokerage franchiser, with more than 13,000 offices and 265,000 sales associates nationwide-that would have expanded the company’s reach into new markets on the East Coast and secured its position in New York. Mr. May said the family had offered Mr. Marra a premium for his shares in the proposed deal, which were valued at approximately $2.5 million, according to sources familiar with the proceedings, and he would have been duly compensated under any investment from Century 21. Mr. May also said Mr. Marra’s decamping to Brown Harris Stevens violated two shareholder agreements he’d signed back in 1985.
“Peter breached his fiduciary duties to our company. He doesn’t understand corporate law: By going there as an officer of Brown Harris Stevens, he is acting against the interest of the [William B. May] corporation,” Mr. May said. “We’re trying to work this out without destroying Peter Marra. If we destroy him, he won’t be able to support my sister.”
Mr. May said that following his brother-in-law’s departure, Mr. Marra attempted to recruit additional William B. May brokers to join him at rival Brown Harris Stevens.
Mr. Marra offers a very different portrait of what drove him to abandon the family business for a rival. He said he made no efforts to bring William B. May brokers with him.
“I learned the May family was selling their shares to Century 21, and I couldn’t go along with what they proposed,” said Mr. Marra, who first joined William B. May in 1983. “I felt like I was in a precarious position, being a minority shareholder. My family had sold the company without telling me, and I was in a no-win position. My shares were devalued; my future in this business seemed bleak at Century 21. So I decided to look at my other options, and I spoke to Terra Holdings, and they were extraordinarily receptive, professional and welcoming. I saw my future at Brown Harris Stevens was bright, and I had to look out for my own family.”
The two parties also disagree over the timing of the deal. Mr. May said he has evidence that Mr. Marra had been in talks with the Zeckendorf family at Terra Holdings months before the announcement in April of his departure, while Mr. Marra said he initiated the deal in four days in April after he learned the Mays had agreed to partner with Century 21. The May family has enlisted the legal council of attorney David Scharf of Morrison, Cohen, Singer & Weinstein to block any further attempt by Terra Holdings to acquire William B. May’s operations, which encompass more than 200 brokers spread across seven New York offices. Roberta Benzilio, an executive at the company, has been appointed interim president.
“We have made an equity investment in the William B. May company, and we have a good working relationship with the May family. We have come to an agreement to separate our interests into stand-alone investments,” Terra Holdings’ co-chairman David Burris said in a statement.
“It took seven weeks of sorting through this flesh, metal and glass of the car wreck Peter created,” said Mr. May. “But we don’t hold particular animosity to the Zeckendorfs. They’ve done something that wasn’t elegant, and they’re trying to make amends. We’ll try and work this out.”
Still, while the two companies have brokered a rapprochement , the steely truce between William B. May and Terra Holdings shows the increasing pressure that independent brokerage firms now feel in Manhattan’s luxury real-estate market, once the domain of society brokers who traded listings over wine at Madison Avenue boîtes, which has now been pried open to the harsh competitiveness and efficiency promoted by national brands.
“I just think the middle market is a tough place to be. We get approached all the time. It’s very hard when you’re a mid-sized firm to attract talent. You’ve got to grow internally. I can speak from experience-it’s a really hard thing to do,” said Jed Garfield, of the boutique townhouse specialist Leslie J. Garfield.
“Part of what happened at William B. May can be seen as freeing someone from a family business,” said Paul Purcell, the former president of Douglas Elliman who is now the chief executive of Braddock and Purcell, a New York real-estate consulting firm. “The opportunity is selling these firms and doing something bigger. Can you do something in a market and get traction in a firm their size?”
Other members of the industry saw the upheaval at William B. May resulting from the internal struggle among members of the May family.
“This is a consolidation that didn’t work out. When we bought Douglas Elliman, we didn’t lose anyone. The partners in William B. May weren’t necessarily on the same page. When you buy a company, it’s very important to look at the culture and the relations among the partners,” said Dottie Herman, the chief executive of Douglas Elliman.
“My opinion is, basically, Terra had the opportunity to take advantage of an internal conflict between Peter [Marra] and the owners of William B. May,” said Frederick Peters, the president of Warburg Realty Partnership, a mid-sized company with 85 brokers.
For the remaining family-run real-estate firms, including old-line boutiques such as Alice F. Mason and Edward L. Cave, the consolidation pressures that perhaps led to the conflagration within the May company show no signs of abating.
In businesses such as real estate, where a family’s hopes and dreams rise on the trade of opulent mansions, battles over money, power and control strike a deep chord.
“My family is important to me; what is unfortunate is that it didn’t have to end up this way. Communication was very lacking,” Mr. Marra said. “I went to [Terra] after I felt there was no future for me at William B. May. It was a very sad day in my life.”
And as Mr. May moves the family business forward following the rupture with his sister and brother-in-law, preparing to open two new offices this year, he sees a future where his family’s nearly two-decades-old company can operate in a successful niche during an era when corporate largesse continues to transform the New York real-estate market.
“You can be independent, debt-free and smaller, and watch the big companies beat the hell out of each other. And that’s what we’re going to do,” he said. “This unfortunate event was only a punch in the nose and not a shot to the forehead. It was a bruise, but it wasn’t mortal. For a firm that’s been in business for 140 years, this will be a footnote to a footnote.”