You’ve decided to sell your strata management business – that’s a big move! To make sure you get the best price and a smooth handover, you need to be prepared.
This checklist sets out nine vital steps to get your business ready for sale.
From checking your contracts to making sure your finances are in order, each point is key to a successful sale.
Checklist to Get Ready for Your Strata Business Sale:
1. Check all Strata Management Agreements / Contracts of Appointments
The basis and foundation for the sale of any owners corporation business or portfolio is the management agreements. Business owners should ensure they have a copy of all the management agreements with all their owners corporation clients.
Sometimes your frontline strata staff might forget or are just not very good with the sales part of getting contracts signed. Or sometimes rightly so they’re busy putting out fires and signed contracts aren’t high on their priority lists.
2. The Assignment Clause in your Owners Corporation Management Contracts
We were brokering a strata business last year – where just before the due diligence process was about to get underway the vendor informed us about a few skeletons in the closet…
Crossed-out clauses provide great flexibility and optionality for OC clients but it’s terrible for any business owner when the day comes to sell.
3. CPI increases and contract renewals
Check that CPI increases have been captured as we have seen many strata businesses where effectively the business was undercharging to its detriment.
Sometimes it’s due to admin or accounts not updating when they should or sometimes it is due to system limitations.
4. Collate your pipeline and touch base with contacts
Do you have a pipeline of owners corporation business and contracts that are coming online and into your business? Do you have a clear and detailed pipeline ready for any prospective purchaser when they ask this question?
We’ve helped strata business owners significantly increase their sales value by understanding and capturing their strata management pipeline.
5. Consider any other liabilities and obligations
A clean balance sheet aids the process versus raising many questions or creating work down the track.
6. Get your financials and documents prepared and ready!
Strata business owners in a good week are often inundated with OC issues and all sorts of matters that require their input. Sometimes keeping their own house in order is left to last.
7. Speak to your accountant!
What is your street-facing entity? Strata management businesses in Australia operate as sole traders, partnerships, trusts, or companies (or through a hybrid holding structure).
It might have been many years ago when you sat in your accountant’s office and spoke about setting up your strata management business. The consideration and conversation should now be about whether your structure is a good structure when it comes to your business sale.
8. Keeping Things Confidential with Staff, Clients, and Competitors
Business owners – remember the sale and the deal are never done until the day the funds clear into your bank account. Up until that point you should be adopting the mantra that “loose lips sink ships”.
9. Speak with Us
David has worked in the strata industry for the past 12 years, along with a background in external audit and banking. David’s true passion and drive is in understanding the financial details and working through the issues.
No one else is better placed to broker your strata management business. You spend years (or decades) building your strata business – get the sale process done right. Talk to us at [email protected].
