Most accommodation business owners eventually reach a point in their careers when they consider selling the business so they can enjoy the fruits of their hard work. If you are at this point yourself, now could be a good time to sell.
The job market has cooled down so more people are looking to control their own destinies by running their own businesses. The trick when you have an accommodation business for sale is to make your business the most attractive option for people wanting to make a purchase.
So, how can you do this? Follow these three essential tips for selling a motel, caravan park, management rights or another type of accommodation business in order to give potential buyers exactly what they need to see and to get the process right.
Step 1: Assess the value of your business
Assessing the value of your business can be a difficult process so you should definitely get help from a professional broker or another experienced person to make sure you get it right.
The true value of your business is determined by a number of factors:
- EBIDT – Earnings before interest, depreciation, drawings and tax.
- The value of each room or apartment, or the entire site.
- The amount of capital expenditure likely to be needed over the next five to seven years – bathrooms are particularly important here as they are the most costly parts of accommodation properties to refurbish.
- The general condition of the property.
The valuation of your business needs to be realistic in order to attract serious buyers, so it is important that it is worked out by someone with experience in the industry.
Step 2: Prepare the paperwork
Anyone buying a business is taking a risk, so you need to reassure them by providing them with detailed paperwork. The documents they will want to see are:
- Profit and loss reports
- Details of your marketing activities and budget
- Any existing arrangements you have with suppliers
Your Broker will prepare an Information/ Investment Memorandum to assist potential buyers in attracting investors. This should contain a number of different information sections explaining in detail why the business makes a good investment opportunity:
- A short executive summary
- The main features of the business
- Details about the location
- A description of the property
- Information about the holiday accommodation market
- Economic and management performances
- Conditions of the offer
Again, this document can be difficult to prepare if you don’t have experience. It is advisable to seek help from a professional broker.
Step 3: Present your property in its best light
When you’re selling an accommodation business, it is essential to make sure the property looks as good as possible if you want to attract high-quality buyers. Pay particular attention to general maintenance and cleaning – consider having your property pressure-cleaned to restore it to a fresher, newer-looking state. The paintwork also needs to be in good condition, and the grounds should be well-maintained and attractive.
It is worth remembering that the average accommodation business needs to be completely refurbished every ten years, and soft furnishings replaced every five to seven years. If you do intend to refurbish before selling, however, it is important to seek advice to make sure you do not overstretch your budget and can still make the best return on your investment.
Find all the help you need selling an accommodation business
If you have a business for sale and you want the best chance of attracting a buyer, Accommodation Business Brokers can offer you all the help and support you need. We can also advise you on selling an accommodation business if you are not completely ready to sell. Please contact our team for more information.