I have a strong suspicion that if most high street estate agents were asked about their relevance in today’s online trading world, they would make a forceful argument about being best placed to achieve optimum market value when selling the prized property assets for the great British public.
Furthermore, their argument I suspect would largely be based upon them adding value due mainly to their in-depth knowledge of local buyers, pricing, and market activity; not to mention expert advice on how to prepare your home for sale, which could not possibly be replicated by either an online estate agent or a member of the public selling privately.
Their argument being that, to sell your home elsewhere would be putting the seller at a competitive disadvantage, and lead potentially to the underselling their most valuable asset. The saving in professional fees from selling privately or online, are likely to be a false saving if your home is sold below its true market value.
Of course, as a former high street estate agent myself of over 30 years, you would expect me to concur with this view, and I do unreservedly and without apology.
However, more importantly than what I think, national statistics confirm that the majority of the house selling public (for the moment at least) would agree with this viewpoint, and consequently still vote with their feet into the offices of the traditional high street estate agents.
Of course, this is all very interesting, but I highlight this to simply draw attention to the schizophrenic behaviour of the same high street estate agents when it comes to selling their own businesses. Would it surprise you to learn (with recourse to what I have written earlier) that a good number of independent high street agents either sell their businesses off market or through internet based business transfer agents who often have no specialist knowledge of estate agency, and yet they still expect to get the best price? Believe me, the irony of situation is not lost on me, given that I have personally sold two independent estate agencies to larger firms within the last ten years.
In both cases, I started my exit-planning a couple of years prior to each sale taking place, so it was no accident that both transactions were relatively stress-free and successfully completed. However, if you are considering proceeding down a similar path, I would encourage you to reflect carefully upon the following points highlighted below, as they are all central to both the valuation of your business, and the sale price that you are likely to achieve :-
- Prepare your business properly for sale – As all buyers (corporate or otherwise) dislike surprises, make sure that (wherever possible) you look to iron out any wrinkles that deep down you know would be problematic to either the buyer or their solicitor during the due diligence process. After all, you wouldn’t sell a car with scratches all over the paintwork and expect to get a price comparable to the same model without – would you?
- Premises – Right from the outset you should consider whether your premises would be attractive to a larger firm, as small or secondary premises generally command less interest from corporate buyers, as they would either – discount their offer in order to take account of the cost of relocating your business to larger/more prominent offices, or quite simply, only be interested in acquiring your rental portfolio.
- Reputation/Goodwill – Goodwill can be difficult to quantify, as it is usually overstated by the seller and understated by the buyer. But if you have been trading for a reasonable period successfully, and your turnover has been generally consistent, buying firms (after much discussion no doubt) will generally acknowledge a reasonable amount of goodwill in the indicative offer that they make to you.
- Quality of Operation – In normal life, when going out for a first date – you need to look your best in order to impress! Well, when selling a business – it is really not much different. So whilst streamlining your costs is good, do not make the mistake of running your business down prior to sale at obvious cost to both its internal/external appearance and/or the manner in which it operates. Not surprisingly, it will lead to a more difficult transaction and in all likelihood an offer from a buyer that is below your expectations.
- Achieving the Best Price – I will offer up three words of wisdom in this area – Preparation, Timing, and most important of all, Competition. The first two I have touched on already, but as all estate agents know full well, it is competition (or at least the threat of it) that drives sale prices over and above market value. Need I say more?
In essence, selling a business requires knowledge, preparation, good timing and a little luck, if a premium is to be achieved. It is of course not rocket science, just good old fashioned common sense. But food for thought I suspect for those of you contemplating retirement or the monetisation of your assets.
For more information or advice, please contact Peter Nicholls at ideology consulting on 0333 9398010 or go to www.ideologyconsulting.co.uk .