The difference between listing and selling your management rights

Contributed By: Lindsay Petty Management Rights on

Do you wish to list your business “for sale” or actually list your business “to sell?”

There is a difference and here we look to identify some of the issues to assist when you decide to place your business on the market.

As with most businesses, buyer appetite continues to evolve & management rights are no different. I have written various articles on aspects of the management rights industry & think it is important for all business owners to be well aware of how to move forward when it is time to sell & to also understand buyer needs.

Most buyers that I speak to are considering what their exit strategy is before they make a decision on what they will buy. Exit strategy or succession planning is something that has now become integral in all business operations. As a manager when you choose to sell your MR this planning will probably play a crucial part in the sale process, perhaps ensuring  sustainable value in your business.

10 years ago, perhaps not even that, a MR business for sale was placed on the internet & enquiry came through. Now prospective buyers still view to identify a building  & then do their own research before they contact the agent. How many of us now, just “Google” something to gain information or knowledge, whereas in the past human contact had to made to find out more. Sometimes buyers own research means they do not even contact the agent & proceed further. Perception can be reality.

One of the key aspects in selling a Management Rights is buyer engagement. This is something that has changed considerably in the past few years.

Advertising a management rights business for sale is one component of marketing the business and there are certainly various advertising mediums utilised to try and source buyers, however there are also other alternatives including database mining & networking. It is surprising how many buyers can be, & are sourced, through the latter two.

You need to prepare your business to be saleable, to actually sell, so we can then source buyers to buy it, not just view it on the web. The following are some of the main issues that buyers provide feedback to us about. Keeping in mind that buyers today may have quite a different approach to when you purchased.

  • For sale figures – We cannot emphasize enough the importance of a P&L for sale as prepared by your MR accountant. Yes, years ago we may have got away with vendor prepared or guessed figures however these days are well gone.
  • Letting appointments – These are the business and have to be correct. There are a few solicitors and accountants providing advice on ensuring that these are well prepared & there is a cost to engage these professionals however if your appointments (form 6’s) are not correct things can turn pear shaped once a contract is signed.
  • Caretaking & letting agreements – once again a crucial aspect with the term remaining on these being “top of mind” for buyers. Anything below 15, even 17 years & questions may be asked about why they are not topped up or extended. Once again there is cost involved, however this is more crucial now than ever before. Generally a lower term can then deter buyers or be reflected in the price someone is prepared to offer.
  • Gallery Vie – I would hope most managers would know what this refers to.  I am not going to go into the legalities of it as I am not a legal practitioner, however owners must take advice from their legal representative to ensure they are aware of requirements when they come to sell.
  • Marketing – With a holiday building you must know what your market is. Percentage of repeat guests, where you advertise, how much time you spend on it, when was your website last upgraded, which websites are your guests coming from etc etc? In the tech world we live in all business owners need to have an understanding of this, & buyers expect managers to know this as standard. You may be familiar with the saying “you must know your business to run your business”
  • Procedures manual. – Do you have one in place which includes all aspects of how the business is run? More buyers now ask to see this, or some form of. Recently at an inspection I had a buyer ask the manager if they could have a quick glance at their procedures manual. The manager gave a blank look and commented “don’t really need one for this business” Given the asking price was over $1.5m the buyer was somewhat surprised that, with such a high valued business, there was nothing in place and this then gave concern to how things may have been run.
  • Pricing – This is probably the hottest topic in the market place. Each operation is quite different and will attract different buyers, however it is the one issue that is raised by buyers in conversations I have. There is no “one glove fits all” Multipliers are what is used in gauging business value, however the way this is applied has changed in recent years. Getting the price right is crucial to selling.

The difference between listing and selling your management rights

Another aspect is “potential” Many buyers are wanting to be able to grow the business, however as a seller this is something that you may have worked on to maximise your price. As an agent we encourage managers to ensure all the boxes are ticked to meet buyers needs, however identifying further growth areas can still be important.

I am still surprised in how some owners contact me for professional advice on the market and how to best position themselves to sell then just list with another agent who may have given no advice at all. Just like your solicitor, accountant & lender a MR experienced agent is a crucial component in the process. Ensure you engage an agent that sits down with you to consider all aspects of your business who can then identify where your business sits in the marketplace & work on a marketing plan that should see you sold. Our role is to provide market feedback and relevant factors that will assist in seeing a sold sign on your business.

Information supply is now also another factor. Buyers are looking for information to ensure transparency. When we list a property we gain as much information as possible. This is the way it should be. You have appointed an agent to sell for you so the last thing you want is an agent that asks for additional information every 5 minutes. The more we have the better we can ensure the continuity of flow. With the immediate world we live in consumers expect instantaneous responses.

So back to my opening comment the difference is a listing agent will list your property at the price you want and place it on various websites hoping for buyers to come to them. They will not necessarily gain all the information they need in the hope that they will snag a buyer. You may generally not hear much from this agent, however at least you are out there and you might, just might sell?

Alternatively you can list your business with a “sales agency” This agency will have industry experience, knowledge of the market, & will provide practical & professional advice to maximise the opportunity of a sale. This agency will be reputable amongst industry professionals & offer a personalised service with regular feedback & contact along with various marketing initiatives to ensure your business has maximum exposure to all available buyers.

Lindsay Petty Management Rights

Lindsay Petty

Director/Sales Specialist.

Lindsay Petty Management Rights

email: lindsay@lpmr.com.au or mobile: 0407 029 138

Lindsay Petty owned his own management rights for a number of years and previous to this has run a number of resorts on the Gold & Sunshine Coasts. Lindsay is still actively involved in management rights operations and has now been selling in a full time role for more than 6 years facilitating numerous sales in various price ranges & regions.

Leave a Reply

Your email address will not be published. Required fields are marked *