CAN I BUY YOUR LISTING PLEASE MR. VENDOR?

12/11/2018 by Rod Askew – RCA Business Brokers

Real Estate agency never changes and the same practises, both good and bad keep going around and around, it’s just the practitioners that change.

After 30 years in commercial real estate, I think I have seen most tricks and traits that the industry has to offer its’ clients.

Unfortunately, honesty is one feature of our industry that sometimes takes a back seat in an effort to secure a new desirable listing.

Management Rights isn’t rocket science and we are fortunate that the formulae we use every day are easily understood, and for the most part implemented with integrity.

Vendors in our industry should have little trouble establishing a value when it comes time to sell their business and they are looking for an appraisal on their valuable asset.

Rarely have I gone to see a management rights owner, who is looking to sell and they say, “We have no idea what our business is worth”.

The very vast majority of you have a very good idea what your business is worth and are just looking for “The Agent” to confirm your expectations.

Now, I tend shy away from vendors who open up with comments such as,

“We’re not in a hurry to sell”;

“We will sell if we get our price, but we’re not giving it away”;

“We know the price is above market, but we’re not budging”.

“Our multiplier is at the top, but it’s a great business”.

“We have to get $XXXXX or we can’t afford to sell”.

“We don’t believe in exclusive agencies, they don’t work”.

Okay, I hear what you’re saying, so let’s sit down and have a look at your business.

I like the vendors who have taken the time to put a profit and loss statement together and who know how many years they still have to run on their agreements.

Vendors who say,” It’s netting around $250k and we have 17 or 18 years to run”, just don’t inspire me at all. The result is 9 times out of 10, $230k nett income and 15 years to run.

Please do your homework first.

All businesses are saleable, if it is priced right and the terms of business fit industry parameters and expectations.

If 3 out of 4 agents you speak with about the sale of your business all agree that the multiplier should be 5.2 times your nett and the unit is worth $520,000, then a big red light should start flashing when the 4th agent tell you 5.9 times and $650,000.

You’ve just been stitched up by an agent that’s prepared to buy your listing and will be at you within 30 days to reduce the price because there is no interest from buyers.

We all know who these agents are in our industry and the sad fact is they get away with this same MO on most businesses they list.

Ask the question, “If it’s worth that much, what have you sold recently that justifies your appraisal”.

Trust your instincts, if it sounds too good to be true, then it probably is.

You know what your business is worth, don’t let that greedy green little monster in the back of your brain believe the lies some amateur is telling you.

“Get it right and get it sold”, is what really works.

Have a great run up to Christmas.

Kind Regards

The RCA Team