Getting the best possible price

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Often vendors fail to get the most from a property deal because they haven't prepared properly. Tony Halstead takes a look at some of the steps you...

Often vendors fail to get the most from a property deal because they haven't prepared properly. Tony Halstead takes a look at some of the steps you can take to ensure your sales strategy is spot on

Preparation is the key to success in selling a pub and getting the price you deserve for your prize asset. Prudent sellers begin the job of preparing their property for the market a good six months before the first advertisement for their business appears in the property pages of the trade press.

Before that happens a licensee must comb through a mountain of check lists and essential sale requirements - only then is a pub ready to receive its first prospective buyer.

It's a long and tricky road and a lot of hard work is necessary to ensure a pub and its

trading history are ready to stand the test of scrutiny a successful sale demands.

Whether you are selling a freehold property or a lease the same golden rule applies before the for-sale signs outside a pub can be safely put up.

Calculating the value of your business and getting a cheque for that precise amount remains the most problematic challenge confronting a vendor.

Realising the full asking price

Only pubs and businesses in pristine shape tend to realise the full asking price and hundreds of sales fall short of the advertised sale figure for a variety of different reasons.

Choosing the right licensed trade property agent, getting your business accounts in order and ensuring your pub is spick and span are three basics required of any vendor.

In between, property agents are able to offer a myriad of other tips and advice to smooth the way towards a successful sale.

A good agent has many years of experience in selling and will be able to guide a client through the maze of pitfalls and obstacles likely to appear during the long sales process.

Christie+Co director of agents Simon Chaplin says that once the decision to sell has been made, a licensee needs to take a long hard look at his pub and his business.

"Six months before you are thinking of moving on, you should stand outside your property and give it a good critical look. If you know of any major structural issues these should be either remedied or investigated."

First impressions count

"Tidy up and decorate those areas in need, especially the entrance, as first impressions count. Don't carry out a full refurbishment - unless it's really that bad - as the cost of this is unlikely to be recouped," he advises.

"Look at your lease and if a rent review is scheduled in the next 12 months see if you can get some idea of the increase from your landlord. They should commence negotiations six months before the due date, so there is no harm in starting the ball rolling. It won't go away by ignoring it.

"Although you may be looking to move on, your staff are legally covered by the Transfer of Undertakings (Protection of Employment) Regulations, which obliges a purchaser to take over all current staff.

"It is worth checking that your employees have current contracts and don't forget any who are currently on long-term sick or maternity leave," he adds.

"Three months before you intend to move get your latest year-end accounts ready and advise your accountant that you are looking at the possibility of selling in due course.

"Have these, and three years' previous accounts to hand, if available, on site. Also obtain a copy of your lease and check who holds the title deeds, which is most probably your bank or lender.

"Now is the time to start researching the agent you may be looking to use. Get copies of the relevant trade papers and check the properties of a similar type that are being marketed in your area."

The importance of preparation

"Select three agents and ask for them to visit you, but check that this is a free service as most agents will be happy to visit and advise you without any obligation," Chaplin advises.

The importance of thorough preparation is echoed by Simon Hall, of chartered surveyor Fleurets.

Hall recommends licensees should contact an agent at the earliest opportunity once the trading records, accounts and other

documentation relating to the business have been properly collated.

"When you have decided to sell, the turn-over and profitability of the pub should be at its maximum level, preferably backed up by three years' certified accounts showing a year-on-year increase in trade.

"Sometimes it is a pending rent review that triggers a vendor's intention to sell, but an exit strategy should ideally be timed to coincide with the end of the review," he says.

"Potential purchasers will not complete on a sale until the review has been settled. Some landlords who know a business is up for sale may play hard ball with the settlement, and the vendor may be under pressure to settle on unfavourable terms," Hall warns.

Hall stresses it is important that a property or business for sale is presented to buyers in the best possible light.

"Remember, first impressions count and a well decorated, attractive property that is in good order, both externally and internally, will often influence a prospective purchaser," he emphasises.

A measurement of want

The term "best price" is a figure that a buyer agrees to pay, but more importantly can arrange to finance, says licensed property agent GA-Select, managing director Graham Allman.

"It's often a 'measurement of want' as against a multiple of net profit or net sales," he reveals.

Allman advises sellers and agents to vet prospective purchasers who appear to be most serious about making an offer.

"Its not just a big numbers game; it's the ability to complete that is most important and not one of multiple viewings," he warns.

He urges licensees to be upbeat and

positive about the pub and the business they are trying to sell.

"Ensure your own mind set is positive. So when you are showing a prospective buyer around your pub try to be as upbeat as

possible.

"Remember, buyers tend to look for a business they can add value to by instigating their own special magic.

"Everyone believes they can do things

better, so you have to forget your own ego if a purchaser talks about what he intends to do to the business when he takes over," Allman adds.

He recommends sellers ask themselves a simple question: "Would you buy the pub and, if not, why not?"

"Is it the price, colour of the pub or poor accounts that would hold you back? If so, do something about it. Price sensibly, re-paint the outside and get you accounts in order.

"Everything sells - after all, remember that you originally purchased it."

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