Put yourself in the shoes of a management rights owner looking to sell his business.
He has decided on an agent and listed the business at or near the appraised price given him by the agent.
He has prepared a “For Sale” profit and loss statement to ensure the figures are correct and the most up to date on which to base his price.
He has even gone to the last AGM a month ago and had the agreement extended by another 5 years.
There are no breaches or issues with the Body Corporate, so it all looks great to hit the marketing and find the buyer.
This is a very saleable business and interest comes from all directions.
Before they know it there are 3 offers on the table and the agent has his job to do in making the right recommendation to the vendor on which offer they should be accepting.
The agent goes back to each party who has made an offer to question them a little further regarding their capacity to complete a purchase. Questions such as:
- Who will be your solicitor for the purchase. (No first time lawyers please).
- Have you spoken with your bank or finance broker?
- Do you have cash available for a deposit?
- Do you have an entity ready for a contract?
Right the! Answers are all in and Mr. Vendor, we recommend to accept offer “B” as they are the most prepared and ready to buy.
Contracts are drawn up and signed by the purchaser and vendor.
Work on the legal due diligence and financial verification is underway and looking good.
The finance broker has done his preliminary work and is just waiting now for the accountant and solicitor to finalise their work so that he can progress the finance application.
All this goes to plan and within 35 days, finance is approved and the contract is potentially unconditional.
The vendor speaks with the BC Manager and organises a meeting for the new manager to meet the committee for the transfer.
Great meeting, settlement in 2 days after the meeting.
Fantastic, everyone is very happy with the deal.
That’s the dream anyway.
Rarely if ever do they go this smoothly.
Usually it is more like this:
- Do you have an entity ready to buy the business – Uhh – No
- Have you spoken with an industry solicitor – Uhh – No
- Do you have cash available for a deposit – Uhh – No
- Have you spoken with your bank or finance broker – Uhh – No.
Are you ready to sign a contract for the business – Uhh – NO!!
It’s like going grocery shopping without looking in the pantry and fridge to see what you need.
You get to the shops, without your wallet and go – Uhh – what are we here for?
A little preparation goes a long way when buying a management rights business.
Buyers please, before you take the leap out into the void, do a little homework and talk to a couple of professionals who will guide you through the process.
Talk to the agent and pick a solicitor and bank or finance broker.
Choose an industry accountant who knows what he is looking for.
With a little preparation it should be your offer that is selected by the vendor to proceed.
Without preparation you may very well be one of the disappointed parties who miss out on the business of your dreams.
March already. The year is racing away.