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MC Rent Roll Broking
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Why Buy Shares in a Company vs Re-Sign New Agreements

There are many advantages and disadvantages to acquiring a rent roll or agency with the shares in the company that holds the agency agreements, versus re-signing all new agreements in to your company or from the vendor's company. It is becoming more and more common, and I am seeing more and more vendors requesting the shares in their company be sold, rather than re-sign new agreements. For the vendor, there is massive upside, but for the purchaser, beware! because if that company has traded as the main agency for sales and property management for many a year, there could be future risks you don't already know about.

Below are my Top 10 things to consider which should start in helping you decide whether or not to sell the shares in your existing company, or for a purchaser whether or not to purchase the shares in a company.

No need to re-sign Agency Agreements. The retention of all your existing owners will be close to 100% as soon as you settle. However, how are you going to communicate the news to all your clients including your owners? You can't just keep it a secret that there are new owners, even if the trading name and all the staff remain in place. People talk, especially staff, and you have to have a clear communication plan and strategy to the market.
Don't change a thing in the short term. If it's not broken don't brake it. The reason you are acquiring this company and business is because it's got a great name, great staff, attractive quality rent roll and possibly good performing sales business. Watch, learn, and tweak. Don't go in like a bull in a china shop, otherwise you won't have a business very soon. If you do sell to the right buyer, and they don't change much at all, you'll have a happy office with happy staff that are no longer worried about change, hence your owners will stay with the new buyer, and your retention will be maximised.
Tax Advantages. There are capital gains advantages as well as small business concessions on the transfer of the shares in the company. Check with your accountant what these are and how much you are entitled to.
Purchase Price. What is the purchaser buying? Does your rent roll have low or high vacancies? The purchaser is buying the possibility of 100% tenanted rent roll with future income. 
Exchange & Settle quickly. Once the due diligence is over and completed as well as the contract finalised, you are ready to exchange. A lengthy exchange to settlement period can only mean there is more chance of the market finding out before you settle, which could mean unrest with the rent roll and staff. Exchnage and then give the staff some time to digest the news, and then move to settle quickly once all entitlements, liabilities and accounting tasks have been performed on the existing company so the purchaser is receiving a clean balance.
Existing Agencies with an already Company. If you're buying the company, and you're an existing agency, then you're about to have another company. Speak to Fair Trading about the logistics of managing two rent rolls with two separate companies, under the one premises, and one End of Month.
Purchaser Inherits all Liabilities. As a purchaser you're about to inherit all liabilities for the company you are about to acquire the shares in. So make sure you do your due diligence very thoroughly and get your accountant involved from a very early stage.
Disgruntled Staff. So what happens when your staff find out and they don't like the new owners of the business? You can sell your rent roll for top dollar, however it stands for nothing if you don't have staff to manage it for the new purchaser. As a purchaser, make sure you give the staff time for the news to sink in. Then spend some quality one on one time with them and get to know them and them to know you.
MAAs not being 100% Compliant. The last thing you want is a purchaser conducting full due diligence on your rent roll and reviewing every single agreement, and fining out the corporation licence is incorrect on some of them, or some have not been signed signed correctly by the owners/landlords. Before you sell, check if the rent roll is 100% compliant. Do an audit of every agreement.
Structure the Sale for Success. If you have a small rent roll or even a larger one, and you've been trading both your sales and property management through the same company since you began trading, then get some advice from your accountant and solicitor on an untraded company in a unit trust structure, with all new agreements signed into. This will give the purchaser comfort they're about to acquire an untraded and clean company with no liabilities whatsoever.
These are just some things to consider and think about when acquiring or selling the shares in a company in order to purchase or sell a rent roll.

For more information or questions, please feel free to give Matt Ciallella a call on 0414 668 972, or email Matt matt@mcrentrollbroking.com.au
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Succession Planning is so important in any business. Checkout my blog article on succession planning in today's RPM Online .....

http://www.rpmonline.com.au/blogs/14027-succession-planning
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5 solutions for compliant MAAs

When I am auditing managing agency agreements for a vendor or purchaser in a rent roll transition, there are common mistakes I see. These mistakes can lead to non-compliant MAAs or even a big headache with only days out from settlement when payment is expected for all the returned signed MAAs;

1. Implement a MAA checklist before the agreements are created, but also for when they are returned and signed
2. Don't handwrite the MAAs. Implement software that will download and merge all the necessary information for the agreement from your property management software

These are just some tips for ensuring your MAAs are compliant. Whether you are acquiring a rent roll roll, selling a rent roll or simply reviewing your existing agreements, make sure you read my blog article on Compliant Managing Agency Agreements - Checklist and 5 Solutions to Fix Mistakes

http://www.mcrentrollbroking.com.au/blog/compliant-managing-agency-agreements-checklist-and-5-solutions-fix-mistakes
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#Laing&Simmons #LeadersForum
Great look for the L&S brand. Team photo of principals and delegates. Thanks Leanne great couple of days
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https://vimeo.com/118681058

I launched my first MC Rent Roll Broking Newsletter today. Check out my client testimonial video with John Ellis, Raine & Horne City Living & Stephen Whyte
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