Building and maintaining a successful vacation rental management company is not an easy feat! You’ve likely put many years into building your strong reputation and collection of properties. When the time comes and you’re ready to consider selling your business, be sure to position it so that you can make the most of all your hard work.
Just like the real estate market, timing is everything when selling your management company. The value of your company can change depending on the season, so being strategic about the timing of a sale can help ensure you receive maximum value, while also setting the new business owners up for success in maintaining and building on your legacy.
How seasonality affects value
Most vacation rentals are in seasonal markets, where occupancy rates in the busy season versus off-season can vary by more than 50 percent. In many cases, the majority of annual profits are earned in just a few months out of the year. This is why the value of companies in highly seasonal markets can fluctuate often — even month-to-month.
While the ideal timing for you, as the current owner, might be to sell immediately following the busy season, this timing would mean potential buyers would not see profitable returns for many months. Potential buyers will be thinking about cash flow and profit after making a purchase. With this in mind, aiming to sell just after your peak season requires tradeoffs and will likely yield a lower purchase price for your company.
If you are looking to sell your company for the highest price, it’s best to generate interest for a sale and close shortly before the peak season begins. Though you’ll miss out on reaping the seasonal profits yourself, you’ll net a higher sales price for your company.
Ideal timing for easing the transition
It’s inevitable that there will be some amount of change when transitioning your business to a new owner. The new owner will need to focus on keeping the company’s operations running smoothly while maintaining employee morale, homeowner satisfaction, and guest enjoyment.
But change does not always have to be difficult. Proper communication throughout the process between all involved parties, including the daily operations staff of your company, will make the process much smoother. This can help ensure everyone is on the same page for the potential implementation of new policies and practices, employee training, and other necessary administrative changes.
Even with proper communication, it can be difficult to introduce and manage changes in the midst of the busy peak season. It will be up to you and the new owner of your business to think ahead and find a sweet spot that allows enough time for the transition to take place before bookings spike, and to consider how your employees and homeowners will be affected by the change.
Each vacation rental market is different, but taking into account the seasonality of your market can help you maximize the sale price of your company and ensure the smoothest possible transition.