sElling
an agEncY
Selling
Finding A buyer
an agency
WHAT IS THE BUSINESS WORTH?
There are no sizeable business transfer
agents specialising in the sale/purchase letting & MAnAgeMent residentiAl sAles
of residential agencies, although there are
•
O ften quoted, value = 1 year’s fee income
several concerns that advertise a wide
•
•
No established values pattern for
+ if sizeable portfolio; 200 properties + transaction based concerns
variety of businesses for sale in the national
•
+ for headline fees and little fee
•
Minimum – v alue of sales pipeline:
press and feature prominently in The discounting paid on completion
Times and Daily Telegraph each Thursday
•
+ little reliance on small number of large
•
+ value of local reputation, length
and Sunday. Telephone enquiries made landlords of time in business
during research for this article did not
•
Length of average tenancy, 18 months
•
+ /- value of location, or cost of
reveal any particular level of expertise or more redundant premises
in valuing businesses for sale, but rather
•
+ value of add-ons: inventory, legal & rent
•
+ opportunities for savings in costs
an anxiety to obtain an additional listing. warranty insurance premiums through avoidance in duplication.
Other publications such as Daltons
•
+ coverage of local & regional market Reduction in headcount
Weekly and Exchange and Mart offer through office location(s), marketing
•
Oppor tunity to introduce new equity/
smaller concerns for sale, but will not strength of brand image, web presence investment partners willing to fund
appeal to the serious vendor or purchaser
•
+ skilled, qualified staff, proportion of partners and exiting or their pension
of a residential business. staff with qualifications – ARLA, RICS, funds
A commonsense analysis is a better NALS, Investors In People
approach. Countrywide, nationally, and
•
•
+ relationship with developers, leading
D ocumented and maintained policies to sole agencies for new developments
Leaders in the Home Counties are well for handling complaints, recruitment, etc
known for their acquisition policies. In
•
•
+ financ ial services income
+ strength of client accounting, control/
•
+ material long leasehold business
almost every region there will be a willing absence of arrears which though low margin can often
purchaser seeking to extend market
•
- for any negatives on the above be sold to larger specialist concerns
coverage who can be identified because
the majority of deals are noted in
PROPERTYdrum. Franchise companies category. Only too often Statutory
such as Winkworth encourage franchisees
Sales are
Accounts are produced late, just in time
to expand by acquisition and will on to meet the demands of Companies House.
occasion purchase directly for onward
often delayed
This is bad practice. If giant companies like
sale to a new franchisee. Shell, Tesco and Waitrose can report
or destroyed by
within twelve weeks of the end of an
PrePAring For A sAle accounting period, how much easier it
The appeal of a business and its value can
incompetent
should be for smaller companies to do so.
be driven upwards by dressing the business Accountants and auditors are often to
for sale without publicity or making staff
advisers. Seek
blame and make dealing with queries
aware. A thorough spring clean always difficult because of delays. A full set of
pays dividends. The need for a physical
out solicitors and
accounts should be available, subject to
spring clean is too obvious for discussion. tax computation, within 12 weeks of the
A lick of paint, inside and out, sharpening
accountants with
end of the financial year.
the window and internal displays, getting The quality of internal management
rid of clutter such as redundant material,
strong commercial
accounts must also be scrutinised. Any
unused or damaged furniture and well run accounts department, even if it is
replacing worn floor coverings will lift staff
practices.’
only one person with occasional help,
morale and improve day to day business. ought to produce a monthly P&L and
The new clean look and higher standards balance sheet by the middle of the
must be maintained because business sales The review should extend to checking succeeding month. The quality of annual
often take several months to complete standard letters, documents and and management accounts reduces the
once a buyer has been found. agreements with vendors, landlords and purchaser’s need for exhaustive due
Extend the fresh look to the website, tenants. The cost of a formal review by diligence, its costs and delays.
press advertising and day-to-day literature. a solicitor who specialises in the residential
A rebranding exercise will not be market is an annual necessity as legislation Advisers
appropriate but giving new attention and regulation change with alarming Sales are often delayed or destroyed by
to detail pays off in attracting a suitor. frequency. Individual transaction files incompetent advisers. Seek out solicitors
Review the quality of the performance should also be checked to ensure they and accountants with strong commercial
of each member of staff and think hard are complete and in order. practices. The friendly guy who dealt with
about incentive schemes that will increase Last but not least, look at the annual your annual accounts for many years and
profitable fee income. Businesses on accounts for the last three years to note any the lawyer who is good at landlord and
a downward trend will receive a down- trends – good or bad – that may need tenant law will almost certainly lack
market price, while those showing growth explanation such as bad debts, big changes experience in business sales, transfers or
are always more attractive propositions. in any one source of income or expense the introduction of new investing partners.
PROPERTYdrum FEBRUARY 2010 33
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