22 Nov

Preparation to Sell Your Asset – Getting Fit for Your Exit

The BOD has finally decided to consider the sale of the asset.  What can you do to make sure there will be offers on the table?

Got a valuation?

You will need a very well documented formal valuation for the going concern business, ideally with a breakdown on the land value and the business value.  Ask your accounting and legal teams to support the valuation company to provide all the necessary information to properly perform the assignment. 

Appoint a professional broker. 

It is imperative to have a professional agent that will help you to market the property but also to execute the deal (including managing outside advisors – legal, accounting, financial and appraisals).  The seller would appreciate that you have a qualified representative and it will send a sign of professionalism. In regards to exclusive agent or multiple agents, we suggest opting for limited time exclusivity if the agent is qualified and would commit to properly market the property throughout a hopefully extensive network.

Clean the Books. 

Ask your outside consultant and accounting teams to help identify outstanding record keeping matters.  Are your outsourcing contracts signed? Are all arrangements with employees documented? Is the maintenance schedule in line with the budget? Is the operator being paid regularly?

Inform your operator and GM.

Hopefully you have managed in the HMA to not agree on having to be authorised by the operator for future disposals. However, it is good practice to inform your operator about the intention to look for third party buyers and have them on your side in case of discussion about future expected performance. The staff however should not be aware of any possible sale.

Support the due diligence.

 As soon as a buyer is truly interested in the asset and the expected value has been digested, transactions could move very quickly. Get ahead and look organized by consolidating and classifying key agreements, financing booklets, employee contracts, HMA and Licenses, forecasts and valuation reports, and other key diligence materials so they are ready for analysis.

Share information but protect yourself. 

Make sure a good Non-Disclosure Agreement (NDA) is in place with each potential buyer before you begin serious discussions about expected values and historical performance, in particular if the buyer is actively searching for other properties in the area or already an owner of competitive businesses. A good NDA will cover a lot of detail so make sure to use a proper Data Room for sharing information.