There’s no better strategy than to prepare early and thoroughly so you present your business in the best possible light and are ready and able to respond to any query throughout the sale campaign.
PRESENTATION IS VERY IMPORTANT
While you are selling a business, it is always wise to remember that first impressions last. How a property presents is very important. Step back and see the property through clear eyes, from the perspective of a potential buyer. Small improvements can make a big difference to the overall appeal. Take the time to touch up any chipped paint, replace blown light bulbs and tidy up the gardens that surround the property. De-clutter the manager’s unit and office so they present in the best possible light.
GETTING THE NUMBERS RIGHT
The clearer a profit and loss statement (P&L) is to understand, the more comfortable a purchaser will be with the information they are being provided. We would strongly recommend getting a specialist accountant to prepare a profit and loss statement for sale purposes prior to taking your management rights or motel to the market.
If problems crop up during the income verification process, it is more often than not due to the fact that the seller has not had a P&L prepared by a specialist accommodation industry accountant. If a purchaser's accountant highlights discrepancies, it is difficult to argue the toss without a professionally verified P&L to support the position. Even worse, we have come across vendors who have prepared their own figures and have underestimated the net income.
It is a fact that short agreements or lease terms are harder to sell and always achieve lower sale prices. Therefore, we recommend overcoming that obstacle before going to market.
For management rights, a motion can be placed on the agenda of the AGM (or EGM) to top-up the agreements up by a maximum of 5 years at a time. For management rights on standard modules, we recommend ensuring that the agreements are topped up to the 10-year maximum in order to achieve the best possible sale price. For management rights on accommodation modules (25-year maximum) we would recommend ensuring that there are at least 15 years remaining in order to ensure the maximum sale price.
For motels, leaseholds start to devalue once the remaining duration on the lease dips below 20 years. If you are a motel lessee with reduced tenure remaining on your lease, approach your landlord to see if you can extend the lease. In this instance, extra years may be purchased from the landlord ... something worth considering when the added value is taken into account.
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