Owning and operating any company is hard work, but if you’re reading this, chances are that you know property management companies can be especially challenging because you’re also in the people business. Some days, you might even wish you weren’t. In those moments, it can be hard to tell if your thoughts about selling are the beginning of a serious decision – or just a reaction to a bad day.
There are plenty of reasons PM company owners don’t make a call to a business broker every time they think about selling. Here are my reactions to some of the remarks I hear most often.
I’m not ready to leave the business for good – it’s too early to talk about selling. I just had a bad week, and next week will be better. I don’t want to waste a broker’s time if I’m not really ready to sell. This is very common thinking, but next week (or next month or next year), you may have the same thought, and you’ll be that much further down the road. It’s almost never too early to start planning to sell your business; in that way, it’s like estate or retirement planning. The sooner you start thinking about your goals and making a plan to achieve them, the better off you’ll be. One of the best pieces of advice I ever received was, “build your business to sell, even if you don’t plan to do so”.
Financial advisors often say, “The best time to start planning for your future was five years ago. The second best time is now.” Even if you’re three years out from selling, you’ll spend those years armed with information that will give you a greater chance of achieving your goals.
I’m worried that if I start discussing my plans, the word will get out and hurt my business. This is a valid and understandable concern. Confidentiality is critical when you’re discussing and planning a sale. You don’t want your clients or competitors to start doubting your commitment to the business. You don’t want your employees to worry about job security and look for other work. You don’t want to attract tire kickers before you’re ready to get serious about a deal.
Those are all important factors, and PM Broker Group understands that better than anyone. Confidentiality is job one for brokers; they couldn’t stay in business if they didn’t handle confidential data properly. You can be assured that your initial conversations won’t become common knowledge, and executing a Non-disclosure Agreement is common practice to establish a level of comfort and assurance.
What if my business isn’t as valuable or well-run as I think it is? Many owners worry that once they open up their books to someone else, some shortcomings could be exposed. It could be a little bit of an ego check, but the worst case result will be identifying areas for improvement. It’s important to know that this first discovery call is very “high-level”, and about your business in general. We won’t dive into your personal financial situation or how well-organized your filing system is.
What we will talk about is how healthy your business is now: Are you growing (or planning to?) What are the strengths of your portfolio and your staff? If you could change anything about your business, what would it be?
We’ll also talk about your personal and professional goals. Why are you thinking about selling? When do you believe you’ll be ready to exit the business? What do you need to fund your retirement or the next phase of your life? Would you be willing to stay in the business if you had a partner who could infuse cash and help the business get healthier or bigger?
Knowing what you want and need from a sale is step one. Step two is knowing where you stand right now. How close are you to that goal? A broker’s opinion of value is an informal valuation based on high-level financial analysis and market conditions, as well as looking at comparable companies that have sold within the last year.
The best part of starting the conversation early…..? If your company is probably not going to sell for what you’d hoped, you’ll still have time to invest resources to grow its value. An experienced broker can also set up consulting services and advise you on what potential buyers are looking for and ways to increase your profitability before you put your company on the market.
Even if you’re not sure this is your year to sell, you’ll come away from your discovery discussions clear on your goals and armed with data. That puts you in the driver’s seat when you do get ready to sell.
If I can help, a good first step is to get a complimentary and confidential opinion of value.