Deal background:

Of course, a big reason for the deal was the deterioration in the residential real estate market. In fact, a significant amount of Realogy's business came from the tough markets in California and Florida. Moreover, all but one of Realogy's stock analysts had a price target on the stock below its current value.

Realogy's management was unsure when there would be a "bottom" to the residential real estate market. But they thought the downturn could be prolonged.

So, when JP Morgan (NYSE: JPM) contacted Realogy, the company's CEO, Henry Silverman, took the call. From there, the deal quickly took shape and he met with the founding partner of Apollo, Leon Black.

On November 21st, Apollo sent its offer for $29 per share. After negotiation, the firm increased the offer by $1 (Silverman did not invest in the deal).

The deal included a "go shop" provision and Realogy's financial advisor, Evercore Partners (NYSE: EVR), contacted 18 potential buyers. However, there were no offers.

Valuation

Evercore conducted a valuation on the deal, which included analysis of 18 acquisition transactions in residential real estate, commercial real estate and business consulting industries (between 2000 to 2006). Here are some of the results:

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.