If you’re considering putting your property management company on the market, staff may be one of the pieces you’re evaluating. Should you add or subtract staff before the sale?
The answer will vary between companies and situations because there are multiple sides from which to view it. Do you have so many people on staff that your NET income is lower than it should be, or do you personally take on so much responsibility that your bottom line appears to be artificially high compared to a new owner who doesn’t intend to be working fully in the business day to day? Do you take on someone new who will have a new boss in a few months, or do you strip your workforce down to the bare minimum so your bottom line will look much more profitable?
The right thing to do is to assess your workforce and make adjustments that are right for the business right now and also sustainable for a Buyer to carry operations forward. Buyers will look for companies with a structure to keep the business running. They don’t usually want to purchase a “job”; they want to purchase a “company” where they can work on strategy, not manage every detail.
So, this is a great time to look at your current staff and see if they’re working to their full potential. Do you have someone in the field who could take on more responsibility? They may be able to serve as a client or tenant’s first point of contact, do troubleshooting, or supervise other workers in the field. When a new owner takes over, it’s great to know there’s an experienced and trusted second in command.
Is there someone on your staff who is ready to take on sales with restructured compensation? The possible combination of salary and additional commission income is an appealing opportunity and a powerful retention tool. Investing in their licensing could pay off through the growth of your portfolio and by rewarding and retaining a talented employee. The same skill set may be applied to business development and used in recruiting and interviewing staff—another set of tasks taken off your plate so you can focus on growing the company.
Your reorganization doesn’t have to consist entirely of hiring or firing; you can also consider outsourcing some of the work. Hire a payroll company, an on-call specialty maintenance group, or a virtual assistant. These solutions cost a fraction of a full-time (or even part-time) hire, and the new owner can easily make changes when they take over.
The point is to ensure you’re not doing work that could be delegated or paying unnecessarily for value you’re not receiving. When you get your staffing right, you’ll know that the company can run smoothly without your input 24/7. One of the first questions Buyers will ask is some version of ”How many hours does the owner work in the business?” Y
As a quick touch on the other side of the equation, this is the time to fire your problems! Your restructuring should include cleaning the house of things plaguing you and could poison the sale. If you have a toxic or underperforming worker, let them go now. If you have someone who’s been “about to retire” for quite some time, use this to recapture that revenue. You’ll have time to find and train NECESSARY employees, and likely someone with more potential who will save you and the new owner a lot of time and headaches when they take over.
Preparing for a sale is your chance to upgrade talent, reorganize your workload, make it more efficient, and eliminate some of your problems. Almost certainly, the investments you make in efficiency and the recaptured waste will pay off in multiples when you get an offer.
About 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.