The Benefit of Experience
As Seen in Business Voice Magazine
By Managing Director, Bill MacAvoy, as featured in the June 2016 edition of Business Voice Magazine (Click Here To View This Month’s Full Edition)
Selling a business is so much more than putting up a For Sale sign and waiting for the right buyer to come along. Factors such as finances, market trends and even emotion all weigh heavily on choosing the right time to sell and whom to sell it to. Bill MacAvoy is the Managing Director of Cushman Wakefield Atlantic, a commercial real estate firm. He says that while selling a business can be an exciting time, it can also be a challenging one. A commercial real estate broker can act as an advisor and a guide during the process.
“The broker brings the experience of undertaking transactions on a regular basis, they often have a larger network of prospects, and a suite of tactics to resolve disagreements during negotiations,” he says. A broker can also help the business owner look at the sale subjectively. “Perhaps the biggest hurdle is the human element; the attachment to the business, and opinion of value of the proprietor,” he says. “The broker can add value here, by resetting the owner to a logical process, void of emotions.” The broker’s role typically begins with a consultation to ensure expectations are realistic based on the current commercial real estate market. The business owner should come to this meeting with the financial records in order, including all real estate details and historical reports that are part of the property and business. With this information the broker will be able to help determine the business’ valuation. “One of the bigger challenges is the role of financing as it relates to pricing,” he admits. “Valuations are always open to the opinions of the parties involved, but, ultimately, if the buyer is intending to use debt as part of the acquisition, the lender’s valuation is the one that will become the most relevant.”
Once the valuation is determined a strategy can be created to market the business to potential buyers and find the right fit, however MacAvoy cautions that there are many variables that can affect how quickly a sale happens, such as the competitive market for the type of business, local or global economic situations and securing financing. Angie Bryant understands this all too well. She was the Owner of Fox Hollow Child Care Centre in Upper Tantallon for 14 years, but eventually came to a point where she was ready for a new career. She knew selling this type of business would come with a special set of challenges. “Selling a childcare centre is not like selling just any business,” she says. “Parents rely heavily on us to care for their young children so it’s so important to have the right buyer. Timing was everything in the sale of this business.” For Bryant, she knew the person who bought her company had to have a complementary vision and philosophy to avoid the risk of losing customers, and potentially the value, of the business in the process. She hadn’t officially put the business on the market yet when one of her long-term employees told her she was interested in purchasing a childcare business. They decided to facilitate the sale themselves however when they started the process of financing Bryant quickly realized the challenges that lay ahead for them. “Small business is not easy to finance unfortunately,” she says. “From start to finish it took her about eight months to get her financing in place.”
Currently Bryant is in the final stages of securing her own real estate license and, looking back now, she says she understands how having the professional services of a commercial real estate broker could have helped move along the sales process,“I think if we had used a broker we likely would have been able to pull the sale together much faster than we did,” she says.
For MacAvoy, he knows how difficult selling commercial real estate can be at times but believes there’s a right buyer for every business and, once that happens, the broker can help negotiate on the business owner’s behalf to reach a mutually acceptable deal and see that agreement through until closing. “The market can, at times, be a cruel place,” he says, but adds, “but with patience, deals will occur.