There are a variety of circumstances that may be causing you to consider selling your real estate agency. Perhaps you’re pursuing a fresh opportunity in a different industry. Or, you might just be ready to retire and enjoy the fruits of your labour.
Regardless of the reason, evaluate the current market first. It’s always best to avoid rushing into a sale, but don’t be discouraged if you need to make a quick exit. If you’ve taken the time to build a solid business, you can still secure a substantial profit.
Strategize your departure
Evaluate the structure of your company, including your long-term goals and vision. Strengthen areas of weakness so that you can present a thriving and successful business to prospective buyers.
Consider current staff who might be interested in taking over the business. Sometimes it can be a simpler process to sell to associates or family members. However, don’t just assume they would be good buyers because you have a relationship with them; vet them carefully.
Continue to be actively engaged in all aspects of your business. Selling a business can be time-consuming and overwhelming. Be sure to stay focused on building your business, managing your staff, and achieving success.
Enlist the help of experts
To ensure a smooth and profitable sale, it’s important that you seek advice from a reputable tax attorney or accountant to ensure that you have a thorough understanding of all tax implications you will face from selling your real estate agency.
Many small businesses may obtain a discount of 50% cut if they hold the business for more than one year. There are also rollover exemptions for deferring a capital gains tax (CGT) event when the gain is moved to another asset/business.
It would be wise to hire a broker and an accountant to make sure all the relevant financial, legal, and operational information is ready and available to present to committed buyers. A broker can also vet “window shoppers” to make sure you’re only dealing with serious buyers.
Find your true worth
Take a look at other businesses in your area and see how they are valued so that you can decide on a realistic price tag. Of course, there are a few other things that you will need to take into account.
Understanding the basics of business valuation will ensure your expectations are realistic. There are three basic approaches to valuating a real estate agency:
- Market: Establishes value based on sales price of similar real estate businesses.
- Income: Factors in the real estate agency’s future cash flow, profit potential, and risks.
- Asset: Considers the worth of the agency’s assets and liabilities. Hard assets can be easily determined, but intangible assets, such as client lists, can be difficult to value.
Regardless of the valuation method you use, there are some practical steps you can take to increase the overall intrinsic value of your real estate agency:
As the owner, you should generate no more than 20% of your agency’s income. A potential buyer wants confidence in a high-profit potential. If you’re an active salesperson who is primarily responsible for the sales, a buyer will see your business as a high-risk investment.
Surround yourself with a strong team. Invest in them, and make sure they are committed to the brand and the company culture. A potential buyer will be looking for an experienced, consistent, and high-performing sales team, and they will be willing to pay more for it.
Continue to build a strong database of satisfied customers. Prospective buyers will see it as a valuable tool for generating repeat business and referrals.
Ultimately, make sure your business is a well-oiled machine with clear processes in place. Operational manuals, clear job descriptions, and established procedures will instil confidence in the buyer that the business will continue to run smoothly during the transfer of ownership.
Be ready to open your books and be completely transparent with all aspects of your agency so that you can give proof that it’s an incredible business. At the end of the day, your estate agency is only worth what someone is willing to pay for it.
Finally, remember selling a business will take a lot of work in and of it itself, but being ready for the right buyer will help ensure a smooth and profitable exit. Visit here if you’re ready to sell your real estate agency and browse through our site to find your next investment.