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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.

I have made use of the services of James Taylor to sell two businesses in the last few years. Throughout the process I have found James to be professional, knowledgeable and thorough. James was able to find high quality prospective purchasers who were financially capable and ready to purchase my businesses. James has a vast network of contacts and maintains regular communications and updates throughout the sale process. James was able to use his wealth of experience and professional network to guide me through to a successful sale for both businesses. I have already recommended James to several of my business colleagues and would not hesitate to do so again in the future.

The business was in a growth stage, so that meant there were hundreds of enquiries. James’ seasoned experience was demonstrated in the way he methodically worked through the enquirers weeding out the time wasters, and qualifying the real potential candidates. The process of selling this business was drawn out on the back of the recent tougher constraints on lending from the banks. As such, I believe James spent a lot more time on the sale than his fee had allowed for. Yet he did this with unwavering enthusiasm and continued head strong into meeting after meeting with potential clients, all in after business-hours... James stood by and saw it to the end. Many times when buyers become a little bewildered  or disillusioned, James’ keen advice to the other side kept them on track. I could not recommend his service any more, it really is a cut above the rest. 

I was very impressed with our Business Broker, James Taylor. James was very professional in all his dealings and guided me smoothly right through the entire buying and franchisor approval process. He regularly communicated with me and allowed me to draw on his excellent knowledge of small business and franchising. I would recommend him to others who are considering buying or selling a franchised business.

James helped to sell our business and was a pleasure to do business with. From his initial consultation he provided a professional service to the highest quality. His personal knowledge of the Franchise Systems helped to find and guide our buyer through the whole process. I fully recommend James to anyone looking to buy or sell a business.

Toby has provided tremendous support throughout the whole purchasing process, and exceeded all my expectations as a buyer. He has gone out of his way to facilitate between multiple parties and move things along, and the purchase could not have been completed without him and the team from Transact.

Throughout all stages of our business acquisition Garry was extremely professional and ensured consistent communication between all parties involved.  Not only was he very responsible in all of our dealings, but he also offered broad advice, guidance and the support we were looking for based on his knowledge and experience across a number of industries. Throughout the process Garry was a great sounding board for us and always available at any time.  Without hesitation, we would recommend Garry and the Team at Transact Business Sales to any future client and are more than happy for any potential clients to get in contact with us directly for any additional feedback on Garry.