How to Sell a Property Management Company??

Question

We have built our company over the last 15 years and have a small manageable amount, about 110 doors, that we manage.  We do all our work in house and have a great team of both ladies in the office as well as maintenance guys.  One thing we have done over the years is kept our circle small, all properties within 20 minutes of our home office in Orland Park, IL.

I know this has been talked about a lot, and I have read a lot of them.....  Thoughts on how to get the word out?

Seems a bit "unprofessional" to just write other property management companies around and say "we are looking to sell, want to meet?".  We are looking for a fair price, does not need to be top $$.  They can keep our people, our office, and even our name for a while or for the long term.

The owner needs to step away from day to day operations and since it is a small close knit company the only way to do that is to sell or have another company "take over".

Any thoughts or direction is greatly appreciated.

Nathan Gesner · Answer

I would do exactly what you don't want to do: contact your competitors and let them know you want out. I manage 350 doors. If someone called me today and wanted to sell me 100 more, I would sit down with them and see if it makes sense. I would much rather buy 100 doors than see them go to another competitor.

If your business is solid, they will jump at the opportunity to pick up more doors for a good price. It's much cheaper than trying to obtain 100 new listings from scratch.

Patricia Steiner · Answer

You're selling a thriving business...why not send notice to your competitors?  That would be my starting place as well as to a few top performing realtors/brokers asking if they would be interested in expanding their real estate business with a successful property management company.  This isn't the time to be modest; 110 doors would be a great get for a lot of people and that's an opportunity you're going to need to see as one to successfully market it for a top dollar sale.

Nathan Gesner · Answer

@Peter T. I manage 350 doors. I am the Broker/Owner so I don't personally do everything. I have a bookkeeper, leasing agent, two office managers, and a maintenance coordinator. And there's overlapping responsibilities in some areas.

If I were buying 100 doors, I may not need all the employees that come with it. I probably wouldn't need the office space, all your equipment, your website and phone number, etc. I would be buying your contracts, not your entire business, they're for my purchase price would be based on the amount of income produced by those contracts.

I recommend you go to NARPM.org and search their directory of property management companies. Many of them are constantly looking for opportunities to expand their business.

The value of your contracts can vary dramatically. are the owners locked into a term agreement or are you managing them on a month-to-month basis that enables them to walk away at any time? How strong are your management agreements? How strong are your lease agreements? What class of properties do you manage? Do you have a strong fee structure that produces $180 per door or are you barely scraping by with $92 per door and spending all your money on employees? There are dozens of factors to consider when valuing your business and offering it to another agent.

Peter Tverdov · Answer

I disagree. He will have a buyer with 100+ doors. That's a nice sized business.

You can also join NARPM and discuss selling your business at conferences. Search DuckDuckGo for property management podcasts, they can help put you in contact with people who might want to buy as well.

Steve Rozenberg · Answer

There are definitely different ways to sell your company. I would definitely make sure your numbers are very correct

Jonathan Sarno · Answer

If anyone else has thoughts i would love to hear them.  Especially anyone who has sold or merged their small 100+ door company with another....

Jonathan Sarno · Answer

Hello Everyone.  I wanted to thank you for your thoughts and advice.

Nathan, I am glad to see that if you got an email from someone you would take it serious.  My concern is we get so much junk from so many source we just delete anything that sounds like a "sales pitch".

Peter Tverdov · Answer

How many of the 350 do you manage?

Caleb Heimsoth · Answer

@Jonathan Sarno at 110 doors you may not have a “sellable” business as a PM company.  It’s likely too small for that.  You probably need 1000 doors or more to have a business that is sellable to a large scale operator.  What you need to likely find is a business broker to sell it.

After fees and everything I imagine the net proceeds will be smaller than anticipated

How to Sell a Property Management Company??

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