I’ve met plenty of property management company owners who woke up one day and knew it was time to get out. They realized they’re tired, they just don’t have the energy and passion for it anymore, or they’re finally ready to move on to the next phase of their lives.
I’m happy to help them list and sell their companies, but I know they’re probably not going to get everything they want from the sale. That’s because by the time they’re ready to get out, they care more about closing quickly than negotiating the best deal. Selling under pressure, even self-imposed pressure, means the buyer always has an advantage.
That’s why I tell people that the time to plan your sale is long before you plan to sell.
When you think through your sale in advance, you can make decisions without any pressure and without the emotional baggage of being tired and wanting out at any cost. I recommend that you start an exit plan right now – take a quiet hour or so to write down what you want to achieve from selling your company. Here are some prompts to get you started.
- At what age do you want to retire? What’s your early threshold and your absolute gone-by date?
- How much cash do you need to support your lifestyle, and for how many years?
- Do you plan to work at all, or simply enjoy retirement?
- What kind of buyer would be ideal for your PM company? Are there any individuals or companies that you’ve encountered that might be a good fit? Why?
- Can you afford to hold a note for a buyer? How long would you be willing to owner finance? What return on investment would you want to see?
- Are you willing to stay involved in the company at all after you sell? On what terms?
Writing down a plan helps you visualize what you’d like to get out of the sale of your company – not just the asking price, but also the exit terms and the timeline you think would work for you. Writing down the criteria you’re looking for in a seller means you’ll be more open to spotting an owner who might be a good fit as a buyer.
Once you develop this seller’s mindset, you can start preparing to make your company as attractive as possible and get organized for the diligence process. I’ve written before about what you can do to increase the value of your company before a sale; planning a couple of years out allows you to accomplish these things at your own pace.
Having a plan in place means that you can control the timing of your exit and be prepared to take advantage of changes in the market. Right now, for example, the cost of debt is higher than it’s been in decades; most owners are having to finance a large share of the deal or sell at a steep discount. We don’t know what the market will be like next year, but if you’re prepared for a sale, you can take advantage of any changes that bring more buyers into the market or make them less risk averse.
When you plan ahead, you and your potential buyer can negotiate your own hybrid deal. You might choose to take an equity position in the company while the new owner focuses on growth. You’ll get the best of both worlds: cash to finance retirement or invest elsewhere and a stake in a growing company that doesn’t need you to be hands-on.
As a property manager, you understand the value of proactive planning over a reactive response. Being proactive saves you time, money, and headaches. I suggest you manage your exit from your company like you’d manage someone else’s property. Develop a vision. Plan ahead. Be prepared.
If I can help you understand the value of your company and help you plan for a sale, I would be happy to give you a complimentary opinion of value.
About the author: Patrick Hurley
He’s a Tallahassee native with almost 20 years of experience in the property management, real estate, construction, and business brokerage worlds. Having owned, operated, bought, and sold property management companies in the past, Hurley is uniquely positioned to help others in the industry find their exit. He’s been described as dependable, highly efficient, effective, and hard-working with a no-nonsense attitude. He takes pride in his professionalism and attention to detail and focuses on his client’s desired outcome.Patrick still meets with every client and passes along as much knowledge as possible. He frequently gives back to the property management community through professional speaking and value-packed article content. When he’s not helping others with a business transition, you can find him adventure-seeking with his young family.