Estate agency has never been more popular as a business.
And, as estate agents are fond of saying to their own customers, “there has never been a better time to sell”.
While the larger firms are known to be actively looking for acquisitions, as are many regional players, it now appears there are many wanting to become entirely new entrants – and with plenty of cash in their wallets.
According to Sean Mallon, managing director of business transfer firm Bizdaq, his company has 297 buyers registered looking for estate or letting agents.
Of these, he says 85% are independent purchasers not involved in an existing estate agency operation.
And prices? Well, make sure you have had a very good year, as Mallon says one year’s fee income is still a good guide to the value of single-branch businesses.
For larger businesses, sellers would be looking for a multiple of two to three times profits.
Mallon also says that while the corporate purchasers will pay top whack, others paying a lower price will happily complete quickly – suggesting that sellers can take their choice.
In view of the number of buyers, including those hungry corporates currently on the acquisition trail, you should find Mallon’s full-length article on today’s site helpful.
It comes a few rungs down today’s news agenda and has some useful advice. Or go here
Something very odd is going on! while testing out a not Nokia mobile phone (a first for 17 years) I ended up listening to a Money Box program on Radio 4 about the value of any firm that had data. It seems the multiples of profit and turnover used to value a business have gone out of the window and some quite staggering multipliers were being offered.
300 new entrants don’t suddenly decide to they want to join an industry that the popular press all too eagerly and all to often describes as……. (Insert trending insult/put down/jealousy) This indicates they all know or think they know something.
I spent a summer helping one chap sell his business, that involved some fascinating reading and insights into how 10 x profit easily became 20 for the right buyer. It seems Agency has become a must have. In those circumstances it is important to understand the high multiples, 20x might seem generous but it’s a bit galling to find out later you could have got more.
It isn’t just those who are tempted by selling up who ought to understand this sudden enthusiasm for Agency, if something is going on, every business owner ought to understand what it is. If there is money in them there hills best you find out about it.
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The property industry is changing from founder based operatives to successful larger scale growth operatives in the chase for greater stock inlets, especially management.
Equally we are seeing a growth in VC funded budget models that work on tech platforms based on stack em high and take many, many cheap fees.
Traditional agents who wish to remain independent and not engage in the above, are best stabalized by B2B uniting opening access to one anothers databases of clients and consumers at arms reach.
Lone agency is getting lonlier.
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Mr Mealham
Is there ANY industry-related subject that you can pass comment on without resorting to an unashamed yet ham-fisted sales pitch for MLS?
Still… I should be thankful for (very) small mercies. At least here on EYE you’re not continually trawling for AM whistleblowers as per your trips down the other pub…
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