Buyer FAQ's

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Frequently Asked Buyer Questions

If you are wanting to acquire other companies, one of the most important things is finding sellers. Many try to overcomplicate this part of the process, but it mostly lies with creating awareness … Meaning nobody is going to sell to you if they don’t know you are buying. Contacting companies in your area and letting them know you are interested in acquisitions is a great place to start, but it will take a concerted effort & consistency in messaging to ensure you get that call when someone is ready to sell. You can join our network of qualified buyers by CLICKING HERE 

Property management company valuations are often calculated as multiples of either gross revenue or EBITDA. However, using simple multiples to price complex companies oversimplifies the process and can lead to arbitrary values. This mean you could either be offering too much (eroding your returns) or too little (your missing on deals). Ultimately the price you pay for a company should:

  • Reflect the intrinsic value of the company
  • Meet your required ROI
  • Accurately reflect the distribution of risk assumed 

If you need someone to help assign a value to a company you are considering, we are happy to put our years of experience and hundreds of companies evaluated to work for you!

The short answer is YES. The long answer is … ABSOLUTELY. Because the majority of property management company owners are also real estate agents, there can be a belief that they can navigate the process alone. This, however, is misguided thinking. Business transactions are highly complex and share very few similarities to real estate transactions. Hiring an attorney experienced in transaction law is critical to any successful acquisition. We are connected with a number of attorneys that specialize in these types of transactions and can provide recommendations upon request. 

Like everything else in business, the answer is, “it depends.” Nearly all transactions that happen in this space are considered “asset purchases” wherein the buyer is simply acquiring the assets of the business, but not the business (legal entity) itself. So why would some people choose to buy the legal entity instead of just the assets?

  • If there are restrictions from assigning the rights to the management agreements in a sale
  • If the acquirer intends to continue operating under the name of the selling entity
  • If there are significant tangible assets included in the sale
  • To distribute owner risks between multiple LLC’s
  • To decrease the likelihood of churn in an acquired portfolio
  • To decrease the likelihood of churn in personnel post-acquisition

There are common things to be addressed in any offer such as:

  • Offer Price
  • Proposed Closing Date
  • Non-Compete and/or Non-Solicitation
  • Due Diligence
  • Employee Arrangements
  • Transitioning Period

There are many more things included in an initial offer, but these are the must-haves. However, in addition to these, there are nuances within each section. For instance, with the offer price – these are things you should consider:

  • Do you offer all-cash, seller financing, or both?
  • If your offer includes seller financing, how much do you put down? How long are the terms? How frequently do you pay?
  • Do you include an earnout in the offer?
  • Do you include an escrow, or “clawback” provision in the offer? If so, how much, or for how long?
  • What happens if there is a change, either positively or negatively on the business between your offer and closing? How will that be accounted for?

As you can see, there are a host of things to consider when writing an offer, so you should give careful consideration to all elements before presenting to a seller.

Need help? We’ve written more offers than we can count, and can help you write an offer that is in your best interest, with the highest likelihood of getting accepted. 

You have a number of options in how you go about funding an acquisition. These can include:

  • Cash offers (if you are well capitalized)
  • Friends & Family Raise
  • SBA Loans
  • Seller Financing
  • Special Credit & Debt Facilities
  • Private Equity
While we do not offer any financing services, we are happy to make introductions to our network in each of these categories to help you identify the right path for your corporate goals. 

Ready to take the next steps?

We would love to connect with you to help answer any questions you may have.