Optimizing Business Exits
Selling a Real Estate Equity Sharing Business
When it's time to sell your real estate equity sharing business, your future plans depend on your ability to get the highest possible sales price. Here's how to do it . . .
In a down economy, many real estate equity sharing business sellers wait to list their businesses until they see signs that the economy has rebounded, making it difficult to accurately evaluate the number of real estate equity sharing businesses that are actually for sale.
Fortunately for sellers, forward-thinking entrepreneurs continue to be attracted to real estate equity sharing businesses that exhibit strong financials and potential for future growth.
Buyer Identification
It's difficult to predict where the buyer of your real estate equity sharing business will come from. To cover all your bases, you'll need to conduct a broad buyer search process. Although it's helpful to target promotional tactics to likely buyers, allow for some exposure to the broader market. Sellers should also recognize the value of promoting their sale in trusted business networks, carefully balancing the need for confidentiality with the promotional potential of their contact base.
Sale Costs
The calculation of your asking price should include a buffer to cover the expense of the sale process. Although they can significantly increase the final sale price, brokers typically receive a 10% commission. Depending on your circumstances, you may also incur substantial expenses in hiring legal, appraisal and accounting professionals. Furthermore, your time has value, so you may need to include a personal compensation consideration in your expense estimates.
Sale Preparation Timeframes
There are no effective shortcuts for selling a real estate equity sharing business. Since buyers prefer to see evidence of future cash flow, you'll want to to strategically lock in cash flows and increase profits before you list the business. Additionally, prospective buyers usually request documentation that allows them to understand the business's daily workflows and operational strategy. Since all of this takes time and effort, a real estate equity sharing business can rarely be ready for the marketplace in less than six months. If you can afford to wait, we recommend investing a few years in improving your business's financial position before you put it on the market.
Share this article
Additional Resources for Entrepreneurs