Snapshot of Past 10 Business Sales, Nick Lucas, Bayleys, Dunedin NZ
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This is a simple exercise demonstrating the fundamental elements to selling your business. Ten businesses, ranked highest to lowest by % difference between selling price and asking price, see how each of the factors line up. Nick Lucas is a specialist business broker in at Bayleys, Dunedin, NZ. Nick works closely with businesses before the sale to ensure they are prepared, and during the sale to give them every chance of getting the best result for them at sale time.
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Snapshot of Past 10 Business Sales, Nick Lucas, Bayleys, Dunedin NZ
- 1. Nick Lucas - Last 10 Sales BUSINESS ID/ TYPE SALE FORMAT APPRAISED MP/ LIST PRICE ADVERTISNG METHOD & INVESTMENT TIME ON MARKET NUMBER OFFERS MEDIA SOURCE LOCATION OF OFFERS FIRST OFFER / SALE PRICE SALE PRICE NEGOTIATION DIFF $ / % LIST PRICE/ SALE PRICE DIFF $ / % A: Lunch Bar • For Sale • Priced • Named 110,000/ 110,000 Internet P. Press $980 28 Days 5 Multi Offer Buyer list (2) Online Property Press* Dunedin 3, Otago Invercargill 130,000 130,500 $500 0.4% $20,500 18.6% B: Service • Deadline • 10 Days • Named 300,000/ 310,000 Print Online Blitz $1,000 10 Days 5 Multi Offer Online (2)* Buyer List Property Press Dunedin 3, C.Otago, Chch 320,000 325,000 $5,000 1.6% $15,000 4.8% C: Bar/ Café • For Sale • Priced • Named 150,000/ 150,000 Internet P. Press $770 50 Days 1 Newspaper Auckland 130,000 149,500 $19,500 15.0% -$500 -0.3% D: Lunch Bar • For Sale • Priced • Named 72,500/ 75,000 Internet Only $400 10 Days 4 Multi Offer Trademe Buyer List (3)* Dunedin 2, South Otago, N. Otago 72,500 72,500 $0 0.0% -$2,500 -3.3% E: Manufacturer • For Sale • Priced • Anon 230,000/ 230,000 Nil Broker intro only $0 80 Days* 500 days with 3 prev. agents 1 Buyer list E.Otago 170,000 210,000 $40,000 23.5% -$20,000 -8.7% F: Construction • For Sale • Priced • Anon 600,000/ 675,000 Nil Broker intro only $0 100 Days* 200 days with prev. agent 1 Buyer list Central Otago 520,000 580,000 $60,000 11.5% -$95,000 -14.1% G: Manufacturer • For Sale, • Range • Anon 910,000/ 1,100,000 Nil Broker intro only $0 62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000 $200,000 28.6% -$200,000 -18.2% H: Joinery • For Sale • Priced • Anon 125,000/ 170,000 Internet $200 380 Days 1 Trademe South Otago 110,000 130,000 $20,000 18.2% -$40,000 -23.5% I: Café/ Bar • For Sale • Priced • Named 375,000/ 499,000 Internet $300 290 Days* 365 days with prev. agent 1 Buyer list Dunedin 300,000 370,000 $70,000 23.3% -$129,000 -25.9% J: Wholesaler • For Sale • Priced • Anon 210,000/ 270,000 Internet $100 192 Days* accounts update deteriorated 1 Targeted Buyer Dunedin 125,000 155,000 $30,000 24.0% -$115,000 -42.6% Average 308,250/ 358,900 257,750 302,250 $44,500 17.3% -$56,650 -15.8% Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >> 1
- 2. 1. Price it Right • On average an accurate price will require less sale time, attract more interest and offers and sell closer to expectations. • Look also at the average difference between appraisal midpoint and average sale price BUSINESS ID/ TYPE SALE FORMAT APPRAISED MP/ LIST PRICE ADVERTISNG METHOD & INVESTMENT TIME ON MARKET NUMBER OFFERS MEDIA SOURCE LOCATION OF OFFERS FIRST OFFER / SALE PRICE SALE PRICE NEGOTIATION DIFF $ / % LIST PRICE/ SALE PRICE DIFF $ / % A: Lunch Bar • For Sale • Priced • Named 110,000/ 110,000 Internet P. Press $980 28 Days 5 Multi Offer Buyer list (2) Online Property Press* Dunedin 3, Otago Invercargill 130,000 130,500 $500 0.4% $20,500 18.6% B: Service • Deadline • 10 Days • Named 300,000/ 310,000 Print Online Blitz $1,000 10 Days 5 Multi Offer Online (2)* Buyer List Property Press Dunedin 3, C.Otago, Chch 320,000 325,000 $5,000 1.6% $15,000 4.8% C: Bar/ Café • For Sale • Priced • Named 150,000/ 150,000 Internet P. Press $770 50 Days 1 Newspaper Auckland 130,000 149,500 $19,500 15.0% -$500 -0.3% D: Lunch Bar • For Sale • Priced • Named 72,500/ 75,000 Internet Only $400 10 Days 4 Multi Offer Trademe Buyer List (3)* Dunedin 2, South Otago, N. Otago 72,500 72,500 $0 0.0% -$2,500 -3.3% E: Manufacturer • For Sale • Priced • Anon 230,000/ 230,000 Nil Broker intro only $0 80 Days* 500 days with 3 prev. agents 1 Buyer list E.Otago 170,000 210,000 $40,000 23.5% -$20,000 -8.7% F: Construction • For Sale • Priced • Anon 600,000/ 675,000 Nil Broker intro only $0 100 Days* 200 days with prev. agent 1 Buyer list Central Otago 520,000 580,000 $60,000 11.5% -$95,000 -14.1% G: Manufacturer • For Sale, • Range • Anon 910,000/ 1,100,000 Nil Broker intro only $0 62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000 $200,000 28.6% -$200,000 -18.2% H: Joinery • For Sale • Priced • Anon 125,000/ 170,000 Internet $200 380 Days 1 Trademe South Otago 110,000 130,000 $20,000 18.2% -$40,000 -23.5% I: Café/ Bar • For Sale • Priced • Named 375,000/ 499,000 Internet $300 290 Days* 365 days with prev. agent 1 Buyer list Dunedin 300,000 370,000 $70,000 23.3% -$129,000 -25.9% J: Wholesaler • For Sale • Priced • Anon 210,000/ 270,000 Internet $100 192 Days* accounts update deteriorated 1 Targeted Buyer Dunedin 125,000 155,000 $30,000 24.0% -$115,000 -42.6% Average 308,250/ 358,900 257,750 302,250 $44,500 17.3% -$56,650 -15.8% Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >> 1 Vs. Broker Appraisal Midpoint/ Vendor Instructed List Price
- 3. 1. Price it Right –When the price is overly high… • Why risk the sale of your business by over pricing? • Sales below suggest pricing above the market could result in lower sale price than had it been accurately priced initially • Sale J shows an example when the vendor runs out of choices… BUSINESS ID/ TYPE SALE FORMAT APPRAISED MP/ LIST PRICE ADVERTISNG METHOD & INVESTMENT TIME ON MARKET NUMBER OFFERS MEDIA SOURCE LOCATION OF OFFERS FIRST OFFER / SALE PRICE SALE PRICE NEGOTIATION DIFF $ / % LIST PRICE/ SALE PRICE DIFF $ / % A: Lunch Bar • For Sale • Priced • Named 110,000/ 110,000 Internet P. Press $980 28 Days 5 Multi Offer Buyer list (2) Online Property Press* Dunedin 3, Otago Invercargill 130,000 130,500 $500 0.4% $20,500 18.6% B: Service • Deadline • 10 Days • Named 300,000/ 310,000 Print Online Blitz $1,000 10 Days 5 Multi Offer Online (2)* Buyer List Property Press Dunedin 3, C.Otago, Chch 320,000 325,000 $5,000 1.6% $15,000 4.8% C: Bar/ Café • For Sale • Priced • Named 150,000/ 150,000 Internet P. Press $770 50 Days 1 Newspaper Auckland 130,000 149,500 $19,500 15.0% -$500 -0.3% D: Lunch Bar • For Sale • Priced • Named 72,500/ 75,000 Internet Only $400 10 Days 4 Multi Offer Trademe Buyer List (3)* Dunedin 2, South Otago, N. Otago 72,500 72,500 $0 0.0% -$2,500 -3.3% E: Manufacturer • For Sale • Priced • Anon 230,000/ 230,000 Nil Broker intro only $0 80 Days* 500 days with 3 prev. agents 1 Buyer list E.Otago 170,000 210,000 $40,000 23.5% -$20,000 -8.7% F: Construction • For Sale • Priced • Anon 600,000/ 675,000 Nil Broker intro only $0 100 Days* 200 days with prev. agent 1 Buyer list Central Otago 520,000 580,000 $60,000 11.5% -$95,000 -14.1% G: Manufacturer • For Sale, • Range • Anon 910,000/ 1,100,000 Nil Broker intro only $0 62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000 $200,000 28.6% -$200,000 -18.2% H: Joinery • For Sale • Priced • Anon 125,000/ 170,000 Internet $200 380 Days 1 Trademe South Otago 110,000 130,000 $20,000 18.2% -$40,000 -23.5% I: Café/ Bar • For Sale • Priced • Named 375,000/ 499,000 Internet $300 290 Days* 365 days with prev. agent 1 Buyer list Dunedin 300,000 370,000 $70,000 23.3% -$129,000 -25.9% J: Wholesaler • For Sale • Priced • Anon 210,000/ 270,000 Internet $100 192 Days* accounts update deteriorated 1 Targeted Buyer Dunedin 125,000 155,000 $30,000 24.0% -$115,000 -42.6% Average 308,250/ 358,900 257,750 302,250 $44,500 17.3% -$56,650 -15.8% Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >> 1
- 4. 2. Advertise: Expose yourself to buyers • A proper advertising strategy will on average reduce sale time attract more offers and net a better Sale Price. • More offers give more options: It’s the difference between being price setter (above) and a price taker (below) BUSINESS ID/ TYPE SALE FORMAT APPRAISED MP/ LIST PRICE ADVERTISNG METHOD & INVESTMENT TIME ON MARKET NUMBER OFFERS MEDIA SOURCE LOCATION OF OFFERS FIRST OFFER / SALE PRICE SALE PRICE NEGOTIATION DIFF $ / % LIST PRICE/ SALE PRICE DIFF $ / % A: Lunch Bar • For Sale • Priced • Named 110,000/ 110,000 Internet P. Press $980 28 Days 5 Multi Offer Buyer list (2) Online Property Press* Dunedin 3, Otago Invercargill 130,000 130,500 $500 0.4% $20,500 18.6% B: Service • Deadline • 10 Days • Named 300,000/ 310,000 Print Online Blitz $1,000 10 Days 5 Multi Offer Online (2)* Buyer List Property Press Dunedin 3, C.Otago, Chch 320,000 325,000 $5,000 1.6% $15,000 4.8% C: Bar/ Café • For Sale • Priced • Named 150,000/ 150,000 Internet P. Press $770 50 Days 1 Newspaper Auckland 130,000 149,500 $19,500 15.0% -$500 -0.3% D: Lunch Bar • For Sale • Priced • Named 72,500/ 75,000 Internet Only $400 10 Days 4 Multi Offer Trademe Buyer List (3)* Dunedin 2, South Otago, N. Otago 72,500 72,500 $0 0.0% -$2,500 -3.3% E: Manufacturer • For Sale • Priced • Anon 230,000/ 230,000 Nil Broker intro only $0 80 Days* 500 days with 3 prev. agents 1 Buyer list E.Otago 170,000 210,000 $40,000 23.5% -$20,000 -8.7% F: Construction • For Sale • Priced • Anon 600,000/ 675,000 Nil Broker intro only $0 100 Days* 200 days with prev. agent 1 Buyer list Central Otago 520,000 580,000 $60,000 11.5% -$95,000 -14.1% G: Manufacturer • For Sale, • Range • Anon 910,000/ 1,100,000 Nil Broker intro only $0 62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000 $200,000 28.6% -$200,000 -18.2% H: Joinery • For Sale • Priced • Anon 125,000/ 170,000 Internet $200 380 Days 1 Trademe South Otago 110,000 130,000 $20,000 18.2% -$40,000 -23.5% I: Café/ Bar • For Sale • Priced • Named 375,000/ 499,000 Internet $300 290 Days* 365 days with prev. agent 1 Buyer list Dunedin 300,000 370,000 $70,000 23.3% -$129,000 -25.9% J: Wholesaler • For Sale • Priced • Anon 210,000/ 270,000 Internet $100 192 Days* accounts update deteriorated 1 Targeted Buyer Dunedin 125,000 155,000 $30,000 24.0% -$115,000 -42.6% Average 308,250/ 358,900 257,750 302,250 $44,500 17.3% -$56,650 -15.8% Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >> 1 Vs.
- 5. 2. Advertise: Many Sources/ Locations of Buyers • There may only be one buyer for a business and only one way to reach them • There may be many potential buyers and reaching them gives the opportunity to create competition for ownership • About 50% sales are to purchasers known to the broker -though relying solely on a broker may not be in your best interest BUSINESS ID/ TYPE SALE FORMAT APPRAISED MP/ LIST PRICE ADVERTISNG METHOD & INVESTMENT TIME ON MARKET NUMBER OFFERS MEDIA SOURCE LOCATION OF OFFERS FIRST OFFER / SALE PRICE SALE PRICE NEGOTIATION DIFF $ / % LIST PRICE/ SALE PRICE DIFF $ / % A: Lunch Bar • For Sale • Priced • Named 110,000/ 110,000 Internet P. Press $980 28 Days 5 Multi Offer Buyer list (2) Online Property Press* Dunedin 3, Otago Invercargill 130,000 130,500 $500 0.4% $20,500 18.6% B: Service • Deadline • 10 Days • Named 300,000/ 310,000 Print Online Blitz $1,000 10 Days 5 Multi Offer Online (2)* Buyer List Property Press Dunedin 3, C.Otago, Chch 320,000 325,000 $5,000 1.6% $15,000 4.8% C: Bar/ Café • For Sale • Priced • Named 150,000/ 150,000 Internet P. Press $770 50 Days 1 Newspaper Auckland 130,000 149,500 $19,500 15.0% -$500 -0.3% D: Lunch Bar • For Sale • Priced • Named 72,500/ 75,000 Internet Only $400 10 Days 4 Multi Offer Trademe Buyer List (3)* Dunedin 2, South Otago, N. Otago 72,500 72,500 $0 0.0% -$2,500 -3.3% E: Manufacturer • For Sale • Priced • Anon 230,000/ 230,000 Nil Broker intro only $0 80 Days* 500 days with 3 prev. agents 1 Buyer list E.Otago 170,000 210,000 $40,000 23.5% -$20,000 -8.7% F: Construction • For Sale • Priced • Anon 600,000/ 675,000 Nil Broker intro only $0 100 Days* 200 days with prev. agent 1 Buyer list Central Otago 520,000 580,000 $60,000 11.5% -$95,000 -14.1% G: Manufacturer • For Sale, • Range • Anon 910,000/ 1,100,000 Nil Broker intro only $0 62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000 $200,000 28.6% -$200,000 -18.2% H: Joinery • For Sale • Priced • Anon 125,000/ 170,000 Internet $200 380 Days 1 Trademe South Otago 110,000 130,000 $20,000 18.2% -$40,000 -23.5% I: Café/ Bar • For Sale • Priced • Named 375,000/ 499,000 Internet $300 290 Days* 365 days with prev. agent 1 Buyer list Dunedin 300,000 370,000 $70,000 23.3% -$129,000 -25.9% J: Wholesaler • For Sale • Priced • Anon 210,000/ 270,000 Internet $100 192 Days* accounts update deteriorated 1 Targeted Buyer Dunedin 125,000 155,000 $30,000 24.0% -$115,000 -42.6% Average 308,250/ 358,900 257,750 302,250 $44,500 17.3% -$56,650 -15.8% Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >> 1
- 6. 3. The Power of Negotiation – Where the broker adds you value • The ability to get the offer when there is only one (or few) buyers • The ability to make the deal and bring buyers up BUSINESS ID/ TYPE SALE FORMAT APPRAISED MP/ LIST PRICE ADVERTISNG METHOD & INVESTMENT TIME ON MARKET NUMBER OFFERS MEDIA SOURCE LOCATION OF OFFERS FIRST OFFER / SALE PRICE SALE PRICE NEGOTIATION DIFF $ / % LIST PRICE/ SALE PRICE DIFF $ / % A: Lunch Bar • For Sale • Priced • Named 110,000/ 110,000 Internet P. Press $980 28 Days 5 Multi Offer Buyer list (2) Online Property Press* Dunedin 3, Otago Invercargill 130,000 130,500 $500 0.4% $20,500 18.6% B: Service • Deadline • 10 Days • Named 300,000/ 310,000 Print Online Blitz $1,000 10 Days 5 Multi Offer Online (2)* Buyer List Property Press Dunedin 3, C.Otago, Chch 320,000 325,000 $5,000 1.6% $15,000 4.8% C: Bar/ Café • For Sale • Priced • Named 150,000/ 150,000 Internet P. Press $770 50 Days 1 Newspaper Auckland 130,000 149,500 $19,500 15.0% -$500 -0.3% D: Lunch Bar • For Sale • Priced • Named 72,500/ 75,000 Internet Only $400 10 Days 4 Multi Offer Trademe Buyer List (3)* Dunedin 2, South Otago, N. Otago 72,500 72,500 $0 0.0% -$2,500 -3.3% E: Manufacturer • For Sale • Priced • Anon 230,000/ 230,000 Nil Broker intro only $0 80 Days* 500 days with 3 prev. agents 1 Buyer list E.Otago 170,000 210,000 $40,000 23.5% -$20,000 -8.7% F: Construction • For Sale • Priced • Anon 600,000/ 675,000 Nil Broker intro only $0 100 Days* 200 days with prev. agent 1 Buyer list Central Otago 520,000 580,000 $60,000 11.5% -$95,000 -14.1% G: Manufacturer • For Sale, • Range • Anon 910,000/ 1,100,000 Nil Broker intro only $0 62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000 $200,000 28.6% -$200,000 -18.2% H: Joinery • For Sale • Priced • Anon 125,000/ 170,000 Internet $200 380 Days 1 Trademe South Otago 110,000 130,000 $20,000 18.2% -$40,000 -23.5% I: Café/ Bar • For Sale • Priced • Named 375,000/ 499,000 Internet $300 290 Days* 365 days with prev. agent 1 Buyer list Dunedin 300,000 370,000 $70,000 23.3% -$129,000 -25.9% J: Wholesaler • For Sale • Priced • Anon 210,000/ 270,000 Internet $100 192 Days* accounts update deteriorated 1 Targeted Buyer Dunedin 125,000 155,000 $30,000 24.0% -$115,000 -42.6% Average 308,250/ 358,900 257,750 302,250 $44,500 17.3% -$56,650 -15.8% Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >> 1
- 7. 3. The Power of Negotiation – Where the broker adds you value The limited need for negotiation when you plan your sale well and create competition for your business. BUSINESS ID/ TYPE SALE FORMAT APPRAISED MP/ LIST PRICE ADVERTISNG METHOD & INVESTMENT TIME ON MARKET NUMBER OFFERS MEDIA SOURCE LOCATION OF OFFERS FIRST OFFER / SALE PRICE SALE PRICE NEGOTIATION DIFF $ / % LIST PRICE/ SALE PRICE DIFF $ / % A: Lunch Bar • For Sale • Priced • Named 110,000/ 110,000 Internet P. Press $980 28 Days 5 Multi Offer Buyer list (2) Online Property Press* Dunedin 3, Otago Invercargill 130,000 130,500 $500 0.4% $20,500 18.6% B: Service • Deadline • 10 Days • Named 300,000/ 310,000 Print Online Blitz $1,000 10 Days 5 Multi Offer Online (2)* Buyer List Property Press Dunedin 3, C.Otago, Chch 320,000 325,000 $5,000 1.6% $15,000 4.8% C: Bar/ Café • For Sale • Priced • Named 150,000/ 150,000 Internet P. Press $770 50 Days 1 Newspaper Auckland 130,000 149,500 $19,500 15.0% -$500 -0.3% D: Lunch Bar • For Sale • Priced • Named 72,500/ 75,000 Internet Only $400 10 Days 4 Multi Offer Trademe Buyer List (3)* Dunedin 2, South Otago, N. Otago 72,500 72,500 $0 0.0% -$2,500 -3.3% E: Manufacturer • For Sale • Priced • Anon 230,000/ 230,000 Nil Broker intro only $0 80 Days* 500 days with 3 prev. agents 1 Buyer list E.Otago 170,000 210,000 $40,000 23.5% -$20,000 -8.7% F: Construction • For Sale • Priced • Anon 600,000/ 675,000 Nil Broker intro only $0 100 Days* 200 days with prev. agent 1 Buyer list Central Otago 520,000 580,000 $60,000 11.5% -$95,000 -14.1% G: Manufacturer • For Sale, • Range • Anon 910,000/ 1,100,000 Nil Broker intro only $0 62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000 $200,000 28.6% -$200,000 -18.2% H: Joinery • For Sale • Priced • Anon 125,000/ 170,000 Internet $200 380 Days 1 Trademe South Otago 110,000 130,000 $20,000 18.2% -$40,000 -23.5% I: Café/ Bar • For Sale • Priced • Named 375,000/ 499,000 Internet $300 290 Days* 365 days with prev. agent 1 Buyer list Dunedin 300,000 370,000 $70,000 23.3% -$129,000 -25.9% J: Wholesaler • For Sale • Priced • Anon 210,000/ 270,000 Internet $100 192 Days* accounts update deteriorated 1 Targeted Buyer Dunedin 125,000 155,000 $30,000 24.0% -$115,000 -42.6% Average 308,250/ 358,900 257,750 302,250 $44,500 17.3% -$56,650 -15.8% Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >> 1
- 8. 4. Other Factors – Name it & Price it While not always possible, named business attract 30% more enquiry and priced business attract a further 40% more enquiry. BUSINESS ID/ TYPE SALE FORMAT APPRAISED MP/ LIST PRICE ADVERTISNG METHOD & INVESTMENT TIME ON MARKET NUMBER OFFERS MEDIA SOURCE LOCATION OF OFFERS FIRST OFFER / SALE PRICE SALE PRICE NEGOTIATION DIFF $ / % LIST PRICE/ SALE PRICE DIFF $ / % A: Lunch Bar • For Sale • Priced • Named 110,000/ 110,000 Internet P. Press $980 28 Days 5 Multi Offer Buyer list (2) Online Property Press* Dunedin 3, Otago Invercargill 130,000 130,500 $500 0.4% $20,500 18.6% B: Service • Deadline • 10 Days • Named 300,000/ 310,000 Print Online Blitz $1,000 10 Days 5 Multi Offer Online (2)* Buyer List Property Press Dunedin 3, C.Otago, Chch 320,000 325,000 $5,000 1.6% $15,000 4.8% C: Bar/ Café • For Sale • Priced • Named 150,000/ 150,000 Internet P. Press $770 50 Days 1 Newspaper Auckland 130,000 149,500 $19,500 15.0% -$500 -0.3% D: Lunch Bar • For Sale • Priced • Named 72,500/ 75,000 Internet Only $400 10 Days 4 Multi Offer Trademe Buyer List (3)* Dunedin 2, South Otago, N. Otago 72,500 72,500 $0 0.0% -$2,500 -3.3% E: Manufacturer • For Sale • Priced • Anon 230,000/ 230,000 Nil Broker intro only $0 80 Days* 500 days with 3 prev. agents 1 Buyer list E.Otago 170,000 210,000 $40,000 23.5% -$20,000 -8.7% F: Construction • For Sale • Priced • Anon 600,000/ 675,000 Nil Broker intro only $0 100 Days* 200 days with prev. agent 1 Buyer list Central Otago 520,000 580,000 $60,000 11.5% -$95,000 -14.1% G: Manufacturer • For Sale, • Range • Anon 910,000/ 1,100,000 Nil Broker intro only $0 62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000 $200,000 28.6% -$200,000 -18.2% H: Joinery • For Sale • Priced • Anon 125,000/ 170,000 Internet $200 380 Days 1 Trademe South Otago 110,000 130,000 $20,000 18.2% -$40,000 -23.5% I: Café/ Bar • For Sale • Priced • Named 375,000/ 499,000 Internet $300 290 Days* 365 days with prev. agent 1 Buyer list Dunedin 300,000 370,000 $70,000 23.3% -$129,000 -25.9% J: Wholesaler • For Sale • Priced • Anon 210,000/ 270,000 Internet $100 192 Days* accounts update deteriorated 1 Targeted Buyer Dunedin 125,000 155,000 $30,000 24.0% -$115,000 -42.6% Average 308,250/ 358,900 257,750 302,250 $44,500 17.3% -$56,650 -15.8% Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >> 1
- 9. 4. Other Factors – Time on the market On average a business sale price is 3% less for each 100 days on the market. BUSINESS ID/ TYPE SALE FORMAT APPRAISED MP/ LIST PRICE ADVERTISNG METHOD & INVESTMENT TIME ON MARKET NUMBER OFFERS MEDIA SOURCE LOCATION OF OFFERS FIRST OFFER / SALE PRICE SALE PRICE NEGOTIATION DIFF $ / % LIST PRICE/ SALE PRICE DIFF $ / % A: Lunch Bar • For Sale • Priced • Named 110,000/ 110,000 Internet P. Press $980 28 Days 5 Multi Offer Buyer list (2) Online Property Press* Dunedin 3, Otago Invercargill 130,000 130,500 $500 0.4% $20,500 18.6% B: Service • Deadline • 10 Days • Named 300,000/ 310,000 Print Online Blitz $1,000 10 Days 5 Multi Offer Online (2)* Buyer List Property Press Dunedin 3, C.Otago, Chch 320,000 325,000 $5,000 1.6% $15,000 4.8% C: Bar/ Café • For Sale • Priced • Named 150,000/ 150,000 Internet P. Press $770 50 Days 1 Newspaper Auckland 130,000 149,500 $19,500 15.0% -$500 -0.3% D: Lunch Bar • For Sale • Priced • Named 72,500/ 75,000 Internet Only $400 10 Days 4 Multi Offer Trademe Buyer List (3)* Dunedin 2, South Otago, N. Otago 72,500 72,500 $0 0.0% -$2,500 -3.3% E: Manufacturer • For Sale • Priced • Anon 230,000/ 230,000 Nil Broker intro only $0 80 Days* 500 days with 3 prev. agents 1 Buyer list E.Otago 170,000 210,000 $40,000 23.5% -$20,000 -8.7% F: Construction • For Sale • Priced • Anon 600,000/ 675,000 Nil Broker intro only $0 100 Days* 200 days with prev. agent 1 Buyer list Central Otago 520,000 580,000 $60,000 11.5% -$95,000 -14.1% G: Manufacturer • For Sale, • Range • Anon 910,000/ 1,100,000 Nil Broker intro only $0 62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000 $200,000 28.6% -$200,000 -18.2% H: Joinery • For Sale • Priced • Anon 125,000/ 170,000 Internet $200 380 Days 1 Trademe South Otago 110,000 130,000 $20,000 18.2% -$40,000 -23.5% I: Café/ Bar • For Sale • Priced • Named 375,000/ 499,000 Internet $300 290 Days* 365 days with prev. agent 1 Buyer list Dunedin 300,000 370,000 $70,000 23.3% -$129,000 -25.9% J: Wholesaler • For Sale • Priced • Anon 210,000/ 270,000 Internet $100 192 Days* accounts update deteriorated 1 Targeted Buyer Dunedin 125,000 155,000 $30,000 24.0% -$115,000 -42.6% Average 308,250/ 358,900 257,750 302,250 $44,500 17.3% -$56,650 -15.8% Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >> 1
- 10. $$$ PRICE IT RIGHT –There is a direct correlation between an overly ambitious listing price (compared to appraisal midpoint) and a less favourable final sale price. In other words pricing your business too high will not achieve as good a result as accurately pricing your business. Priced incorrectly your business will sit for longer, the market will observe the lack of demand and price it accordingly. As well, a vendor is more likely to be disillusioned by the process. 1.9% Use the appraisal and advice from your broker. The average difference between the appraisal midpoint and final sale price of the last ten businesses sold was 1.9%. A broker works for the vendor and may list a business higher on their instruction. Remember though, they are professionals providing you current market advice for the sale of your business. 13 Bayleys commonly use over 13 different media types to attract buyers. This includes both public and agent exclusive options: online, print, direct approaches, social media and buyers already known to the broker. Of the ten sales, offers came from 8 different media sources. Genuine enquiry was received from every source. Importantly many of the enquiries and offers received have come from what we see as in-active buyer sources. That is buyers who weren't specifically looking for a business but, having seen it, have advanced an enquiry about a potential opportunity. At the beginning of a business sale it is never known where the buyer will come from but what we do know is that with exposure comes more interest and competition for ownership. 50% Of the last ten sales, over half the successful purchasers have previously been known and introduced by the broker. A broker’s network is an important tool brought to a sale providing some level of confidence -especially when the business may only attract a small number of enquirers -but it is not a complete answer: When there is a distressed sale or there is an absence of buyer competition for ownership, business owners are price takers. A majority of buyers are local –but vital enquiry comes from around NZ and overseas. Many factors including a business type and scale will determine the ideal marketing strategy and focus. 1:5 Advertising Investment -The graph below shows the dollar difference between the actual sale price and the initial asking price vs. the dollar amount of advertising investment undertaken. As a general rule I believe businesses should invest between 0.5% and 1.0% of the value of their business in advertising and marketing when selling their business. Based on the observed results from the last ten sales, for every $1 (deductible) invested promoting the business sale, the sale result improved by over $5 (capital gain). There are strategies to promote businesses with every set of circumstances including when discretion is required around the business identity. Be very careful though, do not short change your business sale by not advertising. 17.3Power of Negotiation –the average increase we have achieved from a first offer to final sale price is 17.3%. Looking closer, when removing the multi offers (where competition for ownership should extract higher first offers) we have achieved over 20% increase. 100 The first 100 days on the market are the most vital for business owner’s to achieve a sale outcome matching their price expectations. On average for every 100 days a business is on the market the difference between the sale price and the listed price reduces by 3%. After a year your business is worth 11% less. Be prepared, price it right and strike while the iron is hot! 10 FROM THE NUMBERS: Key points of interest
Editor's Notes
- Nick Lucas: Past 10 Sales Data Guide