Leading industry figure Adam Walker has warned independents not to under-sell their businesses, whether to corporates, regional chains or competitors.
Walker said that while Countrywide and several other buyers may be temporarily out of the acquisitions market, estate agency and letting businesses are still being sold.
The problem for sellers, said Walker, is that buyers are currently bargain hunting.
This, he said, could be to the highly significant detriment of owners looking for an exit. It is thought that some recent sellers may have done their own negotiations, and may have felt pressurised into accepting low prices.
As a result, some could be out of pocket to the tune of thousands and possibly several hundreds of thousands of pounds, because they have been talked into believing that their businesses are worth a lot less than they really are.
However Walker, who specialises in the sale of property businesses, said there is still a strong market for acquisitions, particularly those agents with lettings businesses.
Notably, the merged businesses of Romans and Leaders, while last week saying the company chequebook was out, only mentioned their interest in buying lettings firms.
Walker said of his own business: “We have completed on the sale of six businesses since the Brexit vote and have agreed the sale of ten more.
“Brexit has had much less impact on the housing market than was forecast.
“As a consequence both private and corporate business buyers are starting to realise this and are returning to the acquisitions market.
“I have heard about a few businesses that were sold privately at knock-down prices in the immediate aftermath of the Leave vote.
“However, there really is no need for business owners to accept low prices, particularly if their business has a strong lettings element.
“The market for sales businesses is still difficult but I expect that this too will recover next year.”
Comments (8)
I say sell up while you can. At least today the business is still worth something. In another 12-18 months they will be worth half again. Taking drastic measures to keep any momentum within their market. Lowering fees being a major factor. If the business was making an exceptional amount of profit. It wouldn’t be considering a sale anyway.
Aaaaaaaaaaaaahahahahahahahahahahhahaaha.
Ha.
Hard to make head or tail of your posts HybridAgent – as it is ACTUAL sales of Purple Bricks.
In my opinion it’s a bit mad selling an agency with its reputation & brand awareness to get hold of a lump of cash that’s subject to inheritance tax, but which earns fractional yields wherever it’s invested. If anyone wants to discuss an alternative view before considering a single option (in an apparent buyers market) it might be worth having a chat about how not selling might be a better succession plan.
I concur, Robert.
With a c. 2/5 net profit, before tax, on turnover, I think you’d struggle to find a better no-input-needed return on money.
The future of our industry is going to be shaped by intelligent thinking. The hybrid agency of the future isn’t going to be some mickey mouse online effort with puffed ego neg/expert minions loss leading their way to global domination, the hybrid will be a crossover between the three incumbent forms of agency.
With careful succession planning a new form of hybrid agency is going to emerge and will compete comfortably alongside traditional local agency.
I totally agree with this. If I were to buy another agency I might look at offering an ongoing return of between 12.5% and 25% of turnover to the owner for instance…..rather than a capital sum of up to eight times that. Would that be more appealing?
Pretty poor excuse for an advertorial this. Quite a few of these business sale companies value by simply doubling the turnover figure, nothing else goes into it. Buyers do their due diligence, simple.