Preparing Your Management Rights Business for Market

Preparing Your Management Rights Business for Sale

Preparing your management rights business for sale is instrumental in achieving the best possible price.

This is not an overnight task, it’s a process that requires ongoing attention from the moment you purchase your business and often needs to be re-evaluated over time.

What Do I Need to Prepare?

Selling your Management Rights business entails selling two different components:

1). The manager's residence attached to the business (majority of cases).
2). The caretaking and letting part of your business.

Managers Residence

When selling your manager's residence, presentation is key!  Showcase your residence at its best by decluttering each room and maintaining a clean, tidy appearance.  This includes the office area, remember a clean and tidy office gives the impression that the business runs smoothly.

Also, depending on the physical state of the residence and complex alike, it may be worth considering what extras can be done to increase its appeal. Minor adjustments, such as a change of lighting or re-painting the interior to provide a fresh look, can potentially generate great results.

It is important to note that you can have your business/residence looking very presentable for a very minimal and affordable cost. If you can take the time to make any small adjustments, do so as this could be a key deciding factor.

To determine a price guide on your residence, we as management rights brokers will look at recent comparable sales within your complex, or similar surrounding complexes.  Another option is to undertake an independent valuation with a specialised valuer which can give you a definitive price.  Hotel Resort Sales can recommend specialist valuers for this.

Business

When defining your sale price, knowing what your business is worth is an important and vital consideration. This price guide can be obtained by consulting with a management rights broker such as Hotel Resort Sales and a profit and loss report prepared by a specialised management rights accountant.

A profit & loss for sale report prepared by a recognised accountant is an essential tool to help you understand what your business is worth, as well as assist you in making informed decisions.

The benefit of having a profit and loss report prepared will instil confidence with the purchaser, as it shows that the net operating profit is accurate.

Having a detailed profit & loss report also helps you have confidence in knowing the sale price you have advertised is a true reflection of your business.

Additionally, by not having a profit and loss report prepared, you may run the risk of your business being presented as overpriced or underpriced– resulting in it staying on the market longer and becoming “stale” to potential buyers or settling on a lesser price for your business.

Once we have a profit and loss report, we are able to more accurately provide a price guide as to what your business is worth by using industry standard multipliers.

By establishing a market value for the manager's residence and business component, we then combine the two for a total sale price.

Documentation

As part of preparing your business for sale, in addition to the profit and loss, sellers need to make sure all of their documentation for the business is in order.

This includes being able to provide the current Caretaking and Letting agreement, ensuring your Form 6’s are up to date with each of your residences in the letting pool,  that you have an up to date schedule of charges for these letting appointments, and as an added bonus have on hand copies of latest minutes and sinking fund balance to provide to a prospective purchaser.

It is important you have all the relevant documentation readily available, being as open and transparent as possible throughout the process.

One of the most important considerations for your business is to ensure that you are always mindful of years remaining on your Caretaking and Letting agreement term.  This should be a number one priority in applying for top ups within your business journey.  A business that has a high level of years remaining will achieve a stronger sale price.

Additionally, by having the appropriate systems and procedures already in place, you can help smooth the transition for the new incoming Manager. A helpful tip would be to have a daily/weekly/monthly task sheet that you adhere to.

In choosing to be mindful of your business’s future sale, preparing early and having your business ready for sale, you may see a greater return on investment and further benefits – such as increasing your scaleability and a much stronger sale price.