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Maximising Your Sale Price
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Maximising the sale price of your motel is the most important part of the sale process. Selling without achieving the highest price possible is simply doing an injustice to the business and the seller. I have never sold a motel for a seller who did not want to achieve the highest price possible in the shortest amount of time. The steps to achieve this are simple, yet many sellers fail to complete a few easy steps to ensure the best result possible.
Preparation
Prior to offering a motel to the market many items must be attended to and certain information prepared. Some of these things include but are not limited to:
• Accountant’s Profit and Loss Statements – three years figures (if available) are generally requested by a buyer. These figures should be abridged by the seller’s accountant to include only the operating expenses incurred by the business. Expenses particular to the operator should be excluded to show the net maintainable operating profit of the business.
• Plant and Equipment List – a comprehensive list of all the chattels that will be sold with the business e.g. Beds, televisions, fridges, kitchen equipment, etc.
• Lease or Rental Agreements – chattels under lease/hire purchase, such as phone systems or road signage agreements, etc.
• Lease Document – if the business is leasehold tenure. Make sure the lease is complete and not missing any pages.
• Occupancy Rates – per month for the last three years (if available).
• Monthly Income Split up by Department – e.g. accommodation, restaurant, bar, etc.
• Current Tariff Schedule – the last time they were increased, and by how much.
• Property Rates Notice – last two received.
• Recent property improvements – refurbishment items or large repair and maintenance items completed within the last three years.
Marketing
The decision to market a motel for sale via advertising is an important one. The simple fact that the more potential buyers that know the property is for sale creates a more competitive market and gives the seller the opportunity to obtain the highest price possible through spirited market bidding.
Some sellers prefer not to advertise a motel for sale. This is ultimately the individual decision of each seller. Many do not want the name of the business disclosed via advertising, which again is the individuals own decision. Just remember though that one cannot sell a secret.
Qualified Buyers
The providing of information to a buyer who is not fully qualified is a big mistake.
Only a suitably qualified buyer will complete the purchase of a motel. If a buyer does not have the funds to buy, does not have the want to buy, or does not have the ability to buy, then there is no point providing confidential information about your motel business to them. The difficult questions must be asked of the potential buyer in order to avoid providing sensitive information about a business to someone who cannot purchase the business or who does not want to purchase the business.
The role of the motel broker is imperative at this time. It is a complete waste of the seller’s time and money of going down the path of providing information, conducting inspections and signing contracts, only to find out that the contract falls over due to the buyer not being able to finance the transaction.
All this does is incur unnecessary costs to the seller, which can equate to thousands of dollars.
It is difficult where buying and selling is concerned for a seller to speak candidly with a potential buyer. Considerable time and money are saved at this point in the process where the qualifying and requalifying of the buyer is carried out correctly, to ensure the transaction is a smooth one, for all concerned.
Presentation
To maximise the sale price of a motel it is imperative that the motel presents as well as it can upon an inspection by an interested buyer.
Minor items often make all the difference such as small repair and maintenance issues being completed and gardens and trees being trimmed back so as not to be overgrown and untidy.
Obviously cleanliness is important in the day to day running of a motel but it is also important upon an inspection by an interested buyer.
Cleanliness goes a long way, whether the motel is five years old or 50 years old, a clean and tidy motel inside and out will impress.
Buyers will discount the price that they are prepared to pay for a motel if they can see repair and maintenance issues throughout the property.
A small cost upfront to fix and tidy up these items can make for an increased price come sale time.
My suggestion is to fix any items that require attention such as touch up painting, mouldy tile grout or silicon, worn floor coverings, etc. and this will go a long way to achieving a higher sale price.
Motel Industy Specialists
There is a very big difference between selling a motel and selling it at the highest price possible. It can undoubtedly cost a seller hundreds of thousands of dollars and a lot of grief and frustration if motel industry specialists are not employed for the job.
“We can sell your motel!” “We have a buyer for your motel!” These are terms often heard by motel owners within the industry, and it may be true, however will it be at the highest price that could be achieved? Specialists who are fully qualified, fully accredited (e.g. business brokers with the REIQ), have many years direct motel accounting, motel sales and motel legal experience within the industry, and who have a proven track record of successful sales should only be considered for the job, if obtaining the highest sale price possible is the goal.
These items mentioned are your guarantee of getting the best service possible from each specialist field.
Whilst considering a professional accountant, motel broker or Solicitor for the sale of your motel, ask questions.
Which motels have you sold in the last 12 months, citing exact examples? How many years have you been specialising in the motel industry? What are your qualifications? Are you fully accredited with the relevant industry authority? Ask for references.
The use of motel industry specialists will maximise the sale value achieved for the sale of a motel – this is without question.
We hear too many stories where specialists were not used by a seller, and as a result the business was under sold by thousands if not hundreds of thousands of dollars.
Protect yourself and your investment by utilising the skills and experience of specialists in their chosen fields.
To download the full Tips for Selling Motels in a PDF version click here
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posted by anonymous at 21:07, 26/05/10
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Selling
Maximising Your Sale Price
Maximising the sale price of your motel is the most important part of the sale process. Selling without achieving the highest price possible is simply doing an injustice to the business and the seller. I have never sold a motel for a seller who did not
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