Midven’s CEO Tony Stott shares insights… from real estate to enterprises, there’s just no getting around the need to fix what is broken now in order to attract the right buyers.
We’ve been trying to sell two houses over the past 12 months. Both are standard 1990s suburban houses, backing directly onto railway lines and in an area which was considered ‘desirable’!
The first house was empty, so we could refurbish it before putting it on the market. It wasn’t in particularly good condition as it had been inhabited by a group of young men and hadn’t benefited from much attention to decoration for a long while.
We bought new carpets, wallpapered and re-plastered some rooms, and within three weeks of going on the market it had been sold, for 5% more than the local estate agents thought was the maximum selling price that we could achieve. It was a great result.
The second house had existing tenants living there. We could have refurbished it before putting it on the market, but the current occupants didn’t want the hassle of redecorating, and anyway they had chosen the existing colour scheme and couldn’t see any necessity to change things. The house did have a lovely feel to it. so we put it on the market knowing it required a makeover, nothing dramatic, and nothing that couldn’t be done by a new owner within a couple of weeks of moving in. But it did need a makeover.
We put the second house on the market and received 45 viewings in 12 months. Despite reducing the price, and then reducing it again, we did not receive one offer. The commonly mentioned reason was that it was too close to the railway line, but that reason just didn’t stack up compared to the quick sale of the other house, and the large number of houses in the village that also back onto railway lines.
After 12 months we reappraised the situation. We bought new carpets, wallpapered some rooms, reduced the price again and within 3 weeks of relaunching it on the market it had been sold. In fact every single person that viewed the house after relaunch made an offer. That’s six offers in three weeks. Due to the long time it had been on the market we only received 98.5% of the asking price, but we were so relieved to sell it after 12 months.
Then I thought about some of the companies we had sold over the years. So many of them suffered from the issues that we had in the second house. The existing owners were reluctant to fix the small issues. Either it was too much hassle, or there was no point as a new owner would have their own way of running a business. But in reality no one wants to pay a full price for a house or a company that needs instant repairs.
In many cases, to really prepare a business for sale, the original entrepreneurs (the ‘house owner’) need to step back and see the entity as a prospective buyer does, then act to ensure the small issues are fixed. Only then will a company realise its full potential when it is sold.