The key to the successful sale of your hotel? Start planning early

Have you considered the idea of selling your hotel business one day? It can take many months to plan a business sale effectively, but it is advisable to consider an exit strategy with the guidance of a professional as far ahead as possible – even several years.

This will help you to define the ideal buyer and take practical steps to make your business as attractive as possible to potential purchasers before you launch it to the market, ensuring a successful sale and great price.

So, what do you need to consider before putting your business on the market?

Select a team of professionals as far ahead as possible

Don’t wait until you’re ready to put your hotel business on the market to engage with a specialist broker or property solicitor. It’s important to research and build a team of professionals around you as far out as possible, to help position your business to achieve the best price.

Key considerations:

• Business Agent: when choosing a business agent, it is key that they are relative to your sector and can demonstrate and provide evidence of their successes within your sector. They should be able to visit you at your premises and offer sound advice on the prospects of a sale, the price range that you should expect, offer advice on any steps that you should undertake before placing the business for sale, provide a timeline and marketing plan, demonstrate similar sales and their successes and above all display their professionalism, knowledge and integrity as you are about to trust them with the sale of your most valuable asset.
• Solicitor: in today’s market, it is important that you instruct an experienced property solicitor who is a specialist in business sales within the hospitality sector, to avoid any delays to the sales process.

Set your objective for the sale

What do you want to achieve from the sale? Your main objective may be to secure the highest price, for example, or to sell as quickly as possible. The professionals that you choose to work with can help you define your key objective and advise you on how to best prepare your business to achieve this, as well as the right time to launch it to the market. This will help guide the process more effectively.

Obtain a valuation of your business

It is crucial to obtain a professional valuation for your business from an industry specialist. At Christie & Co we value and sell hundreds of hospitality businesses each year. We have a team of both valuers and brokers who are well placed to offer specialist advise on the valuation of your business based on comparable sales of similar businesses. We will take your objectives for the sale into account and assess where your business lies within the market. You can also carry out your own research, investigating recent sales of similar businesses in your area, for instance. This will help you to gain a general understanding of business values, and the length of time it might take to sell your own.

Ensure you have the necessary financial information in order

Making sure your accounts and financials are organised and accurate will instil confidence in potential buyers and help avoid delays in the sales process once you launch to the market. Buyers will need to see a range of clear and accurate financial documentation, including:

• simplified company reports
• historic turnover and profit figures
• asset valuations
• details of liabilities and debt
• profit forecasts
• incorporation documents
• leases and contracts

At the most basic level, potential purchasers will look for the level of income generated by your business over the last few years, and the corresponding cost figures. You should also provide a realistic and detailed projection of future sales and profits.

Consider making any necessary repairs and upgrades your business premises

First impressions count, so completing any necessary repairs or upgrades and cleaning your premises is a good idea prior to taking professional marketing photos and placing the business on the market. This will help draw people in, demonstrate your care and attention to detail and could add value to your business.

Complete the proper due diligence

You should check your contracts for any anomalies or uncertainties before you present your business to the market. Staff employment contracts, supplier terms and conditions, and customer and legal contracts all need to be reviewed for any outstanding issues or potential problems that could derail a potential sale.

You should also consider the intellectual property owned by your business, and if it is registered and up to date. A crucial factor for any potential buyer is their right to use the trademarks and patents associated with their investment, something they'll be sure to check.

To sum up, preparation is key to ensuring you achieve a successful sale and maximise the proceeds. Building your future exit strategy with the guidance of a professional should start now. Get in touch to find out how we can help.