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An ongoing success: Mark Sinclair

If you are thinking succession planning or it's time for a change then selling your business as a going concern may be a great option for you and your buyer.

We recently facilitated a sale of a business as a going concern with positive outcomes for both buyer and seller. While there was additional due diligence and settlement requirements, this deal was relatively seamless for everyone involved.

With so much interest from agency owners keen to understand each selling option and which is best for them, we wanted to share this recent transaction and some of the lessons learned.

The background

Over nearly two decades, the husband and wife owners transformed a small start-up office to a large, highly profitable and very robust business. One was a high-performing agent, with the other managing the office.

While they had a great team and were the dominant agency in the area, both felt the time was right to transition to the next stage of their lives and exit the industry.

Realestimations were engaged to perform a business review and valuation; however, after assessing our findings and advice on the options available to them, the couple decided to engage us to market and sell the business as a going concern.

The business

A suburban agency, located approximately 15kms from the CBD, in a family-orientated, middle-income marketplace, the business was part of a large national franchise group, had two directors and a total of 20 staff.

They had 1,000 properties under management and annual sales income of approximately $1.5m GCI.

The sale process

The significant differences to a property transaction, the importance of maximising their returns and the emotional challenges involved with selling a long-standing business meant the sellers wanted and needed us to guide and advise them throughout the transaction.

The period from identifying the best buyer through to settlement is typically the most stressful for sellers and it was no different in this case.

Once the buyer wished to proceed, we facilitated each stage successfully and helped our clients prepare and execute settlement effectively, minimising anxiety and stress for them during a significant event in their real estate careers.

The outcome

Building and developing a great real estate business is a significant achievement; however, exiting effectively is just as important.

We were able to help the sellers demonstrate tangible business goodwill and achieved the following:

  • A sale price for the property management department of 3.5 times earnings
  • A sale price for the sales department of 1.0 times earnings
  • As it was a share sale there was no slippage from property management
  • All key property management, administration and sales staff were retained

We’re always appreciative to be engaged by sellers, but we were thrilled at what we and our clients were able to achieve with the sale – and what that meant to them personally.

The lessons learned from the sellers is a great ‘blueprint’ for owners looking to exit by selling as a going concern.

They conducted themselves professionally, followed our process, instructions and time frames, and ensured their obligations were met throughout each stage of the transaction.

Their commitment to getting the best result delivered it to them and allowed them to transition to the next stage of their lives with enthusiasm and without regret.

A fantastic result!

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