With a great deal of potential mergers and acquisitions within the property sector expected during the next 12-24 months, we spoke to John Paul, Founder and MD of Castledene Sales & Lettings. John Paul, who was recently appointed to the board of Propertymark, gave us the lowdown on the mergers and acquisitions process and how to make the most of it - from the point of view of both buyer and seller.
If you’re thinking of selling a letting agency
- Prepare for your sale well in advance. John Paul recommends putting things in place at least 12-24 months before you decide to go to market because many of the things you will need to do to prep your agency for sale and maximise your profit can not be done overnight.
- Make sure you’re no longer integral to your business. Your continued involvement will make the letting agency less attractive to a seller, who might worry that business performance will be adversely impacted by your exit. . The best way to prove your business can run just as well with or without you is to embed a culture of standard processes. In practice, this means you need to have written processes for all business operations and begin delegating as much as possible to staff. Having a process document for each department is just the start; creating a process-driven culture is no short-term task.
- You need to install a really robust management team. You are selling your staff as much as you’re selling your business. Make sure you have no gaps in your workforce, no pending disciplinaries and that the rockstars of your business are working for you.
And if you’re thinking of buying a letting agency
- The first question you need to ask is whether you really need to buy another agency or whether you can grow your own business organically. What’s your objective? The best reasons to buy will be to break into a new town or city or to access an entirely different market.
- Once you’ve established that you definitely want to buy into another agency, be bold in which businesses you target. Never be afraid to approach a competitor and ask them if they’d like a coffee. You never know which companies might be looking to sell. Once you’ve identified a few possible targets, do your due diligence before you approach them. You can pick up information quickly and easily through Companies House, the company’s social media page or if you’ve had any landlords or staff come over from the company. This should, however, be just the start of your due diligence. Should you proceed with a sale, ensure that any offer is subject to the same degree of scrutiny. You need to know what’s under the hood before you make an offer.
Anyone looking into buying a letting agency or selling a letting agency should check out our recording of the full M&A: Tips for Buyers and Sellers of Lettings Agencies webinar for expansion on these points and many more tips.