How to Sell a Hospitality Business

Selling a hospitality business can result in a return of 2-3x annual profits if the owner takes an active role and makes smart business moves during the sale process. The hospitality industry continues to trend upward, with Australian market value around $38.7 billion in 2018.

If you’re looking for maximum returns on your hospitality business, this quick guide is a good start to protect you from potentially costly mistakes.


Use a Broker

It’s dangerous to go into any business sale blind, even more so in the hospitality industry where special equipment, fit outs and staffing are usually involved. Navigating the local market for businesses is the day-to-day work of a business broker, and they can help you to create a solid case to buyers on the market.

The broker’s role is to advise you on the technical matters of the sale and how to prepare the business for sale, allowing you continue to focus on running the business. This offers you a great opportunity to focus on your exit strategy as your broker handles all the marketing and advertising on their end. You should also take this time to clear up any loose ends on your finances that could delay the purchase.

Similar to a real estate sale, your broker will have access to knowledge, tools and connections that you would never have trying to sell your own business. For example, there is a big difference between marketing an independent hotel business and a franchise. Get honest advice from the experienced brokers at Transact Business Group.


Gather All Important Documents

Together with your broker, you will need to compile an official sales package. This will contain all pertinent sales information, inventory and suppliers etc., and in some cases a legally-binding nondisclosure contract.

This sales package provides all the important documentation needed to quickly move the buyer along to prequalify them for purchase. It usually includes raw sales data, a history of hospitality performance in the region, and a detailed memo of operations. The buyer should then provide financial documentation to prove their intent to buy.


Valuation with EBITDA

This abbreviation stands for earnings before interest, taxes, depreciation, and amortisation. It is the standard baseline for valuing a business and allows for the most accurate valuation, excluding the owner’s personal tax investments.

Outside of the bottom-line, you should also account for your business’ intangibles, which comprise of brand recognition, history, customer demographics, renovations and more. The going market value may sit below your valuation, but you can make a good case if you face little competition and a great location.


Sell Your Hospitality Business

Following these tips on how to sell a hospitality business will get you farther ahead than the average business owner. Some owners don’t know that they are sitting on a goldmine. Others who are looking for an opportunity to start a new venture should stop hesitating.

You can sell your hospitality business fast and for much more than you think. Contact us today and we’ll show you just how easy it is to get the most for your business.