Preparing Your Business For Sale
Your Management Rights business probably represents your largest single asset. Other than the time you have invested in family, you will undoubtedly have directed the greater part of your time, effort and finances into building a successful business enterprise you are proud of.
However, there comes a time when all Management Rights owners decide to sell and, when making this decision, it is important to ensure that you present your home and business in the best possible light if you are to receive the well-deserved financial rewards for the hard work, dedication and commitment you have invested over the years. Preparation may mean the difference between maximising your price and seeing your prospective buyers buy elsewhere.
Preparation also minimises the chance of the sale terminating because of failure to meet due diligence conditions. Your objective is to be prepared for any issues that may arise; remember that your sale will be dependant on ensuring that your agent has accurate, factual information to present to prospective buyers.
First Impressions Count
Both the real estate and the business component need to be presented in the best possible light.
Take an objective look at your home and office and the common area
- This is your chance to clear unwanted items and pre-pack belongings you want to take with you. Your objective is to achieve an uncluttered, pristine appearance.
- Are there any maintenance issues? If it needs fixing, do it now.
- Remove any clutter from the office area. A clear desk and tidy files represent an orderly, stress-free working environment.
- Ensure that the common property you are responsible for presents in top condition. This will convey the message that you are on top of your caretaking responsibilities.
The real estate component will be valued at current market value with a 5-10% premium added in acknowledgement of the office and any additional real estate associated with and sold as part of the business. It is often a very sound idea to ask a registered valuer to value the freehold real estate component, as an unrealistic price on your unit could make it difficult for your buyer to obtain finance.
Take a serious look at your business operation
Prepare in advance for the due diligence requirements:
- Ask your accountant to prepare a profit and loss statement for sales purposes of the most recent twelve-month period. This verification profit and loss statement is different from your normal year-end financials that are prepared for tax purposes. It will be presented in an industry accepted format which dictates the allowable income and expenditure categories allowable in the calculation of the net profit figure and needs to be as up to date as possible.
- Prepare an inventory list of the items included in the sale as this will be required for the sales contract. Be specific and, where appropriate, also prepare a list of the Body Corporate plant and equipment used for caretaking purposes.
- Draw up a rental/tariff schedule detailing the number of units in the rental pool, current rent range by unit type and/or the seasonal tariffs achieved, number of external lets or look ups and number of resident owners.
- Check all PAMD 20a Appointment to Act Agreements. In Queensland it is a requirement of the Act that the agreements have the assignment clause in place. Check that the copies you have on file have been signed by the property owners. Your Buyer’s accountant will specifically note any anomalies in the verification report.
- Check that your Caretaking and Letting agreements are current and have copies on hand to present for due diligence. It may be pertinent to “top up” your agreements prior to starting the sale process.
- Hunt out your Deed of Assignment or Deed of Variation document and verification of your current Body Corporate income.
- Consider preparing a comprehensive, written property summary which details the facts, figures, history and potential of your business. By including photographs and a summary of the surrounding infrastructure you will have prepared a very valuable marketing tool.
Talk to your Body Corporate
Although some Management Rights owners are hesitant to advise the Body Corporate that they are considering selling, it is our experience that it is far better to keep them informed. You can set the stage for the management transition and work with the Body Corporate to achieve this. If you have experienced issues with your Body Corporate, they could well be happy to see you sell and, if the sale is properly handled, will be happy to co-operate. It may be an appropriate time to discuss extending or “topping up” your agreements.
You will need to obtain a Disclosure Statement from your Body Corporate as this will be required for the sales contract.
Select your Sales Agent carefully
When you reach the decision to sell you need the certainty that your sale is being handled confidentially by experiences professionals.
An experienced Management Rights sales agent will have valuable information to share with you relating to current market trends and recent comparable sales. By selecting carefully you will be able to lean on this experience and eliminate many of the “show stoppers” that inhibit sales. Agents specialising in Management Rights sales have valuable contacts within the industry and are accustomed to driving the sales process.
At Calvin Bailey Management Rights we are committed to providing a hands on approach to your sale and our success has been built on the quality of service we provide. Your listing agent will remain your key contact, but our entire team will market your property. We use effective advertising channels and market extensively to our database.
We invite you to accept our offer of a complimentary, confidential interview to discuss the sale of your property. Our experienced agents will share their knowledge with you and provide recommendations on presentation and market price. Phone us on (07)4059 1254 or email us for a confidential discussion.