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SELLING
AN AGENCY
Selling an agency
’s Practitioner looks at this
major step that will, sooner or later,
confront everyone who owns an agency.
ow much is my agency Larger concerns may well be valued
H
worth? Is an offer that I have on a Price/Earnings ratio between 3 or 4
received out of the blue times pre-tax profits, subject to adjustment
worth considering? Values by adding back the drawings of principals
differ widely, there are to the extent that they exceed the cost of
guidelines but no standard salaried replacements.
rules. The old adage – it is worth what No decision to sell, unless unavoidable
a willing buyer will pay – always due to health problems or terminal
applies. What steps should be taken dissension between lifetime
before searching for a buyer? or business partners,
Smaller letting agencies with should be taken until the
one or two branches, managing most careful thought has
between 200 to 400 properties, been given to the
personally owned by one or two investment of the
principals, will often fetch a proceeds of sale net of tax,
price similar to one year’s fee the costs of sale and the
income. This sum may not cost of re-investment.
be sufficient to fund Values vary dramatically
retirement, since such firms between sales agencies – transactional
are lifestyle businesses that businesses – and letting agencies with
often provide a range of recurring income. Young estate agencies
goodies as well as valuable salaries may be worth no more than the value of
and pension contributions; personal the sales pipeline and will be paid for as
freedom, cars of choice, mobile and sales complete. Larger, well established
home phones and broadband are firms with a strong local following, good
usually tax deductible. Staff connections with developers and a number
refreshments often extend to of branches that provide regional coverage
decent sandwiches, an occasional will do better but the partners’ ability to
lunch and chocolate biscuits from sell will often depend on new partners
the private tin. willing to buy in.
PLANNING FOR SALE
INTERNAL


Cull and archive dead fi les
Spring clean premises



Identify competent commercial lawyer
Make fi le for offi ce Gas Safety, asbestos experienced in business sales and equity
Get rid of the clutter checks and security transfer

Revive window and internal displays


Create a vital document package; leases,

Review standard letters, terms and
Redecorate insurances, planning consents, three conditions of business, landlords and

Refresh website and advertising years fi nancial and monthly vendors forms of instruction with

Review staff performance, incentives management accounts solicitor specialising in landlord and
and staff records


Research identity of potential purchasers tenant law
Inspect fi les for recent and current

Check advisers Terms of Business and
transactions EXTERNAL fee estimates

Check premises comply with Health

Consider appointing fi rm of accountants

Explore advisers knowledge of potential
& Safety Regulations with similar experience buyers or agencies
32 FEBRUARY 2010 PROPERTYdrum
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