End of financial year tips - Getting ready for selling

Published: 15 July 2008.

Contributed by Frank Higginson of Hynes Lawyers

As the management rights market catches its breath, along with most things property related, it is time for everyone to make sure their business affairs are tidy.

From a management rights seller’s perspective, making the business as ‘clean’ as possible for any potential buyer is critical. If it is a market where buyers are picky, the less potential defects (whether real or imagined) with a business, the better off you are going to be as a seller.

Letting appointments

We are starting to sound like a broken record, but we cannot emphasise enough the importance of these.

The focus on these being in place, and being immediately assignable, has not lessened. It is now part of every management rights expert accountant’s report, and buyers want certainty about continuation of the letting appointments. If you have not got every one in place, and made sure every one is assignable, make sure you do so now. It will be a big ‘tick’ for buyers on their wish list.

That leaves aside the fact that you should not be letting units without a written letting appointment in the first place!

Sale figures

If you are thinking of selling, make sure you have had your sale figures done by an expert management rights accountant. We recently had clients buying a management rights business whose sale figures had been prepared by a non-industry accountant. Included in the figures were expenses relating to the management lot, which ordinarily are not expenses for sale purposes. Our clients were, quite naturally, happy to wave this one through, as the net income for the business for sale purposes under the contract was actually higher than that contracted for (a very unusual circumstance indeed).

On a final note, we expect changes to the BCCM Act and modules in the next few months. We believe that some of the most contentious issues have been settled, but the moment we know for sure we will update you all.