Selling your Real Estate Brokerage - Part 3: Understand the acquisition process

I have a fully executed LOI, now what do I do? 

A signed LOI signals the start of the process. Typically there's a period of time within which the buyer will be doing due diligence, and toward the end of that time frame, a Purchase and Sale Agreement will be prepared by the buyer's lawyer and sent to you for review, changes and signing. Once the agreement is signed, escrow is open and there's a time frame to get all necessary paperwork to escrow for closing. 

You might think 120 days is a long time to get everything together... It can go by in a flash.

Photo by Aron Visuals on Unsplash 

Expect that the buyers will have at least a million questions. Some questions will be asked multiple times, some by multiple people, questions about your company culture, what people at your company expect with regard to your selling. Remember all that paperwork you prepared? You will be asked for more lists and paperwork, and sometimes the same lists and paperwork multiple times. This is normal. The person helping put together the deal itself is (probably) not the same person as the CFO who must necessarily look at all the financial paperwork in great detail. The CEO of the company will have their own set of questions, the Operations person another, the Sales Director another, the lawyer(s) another.  

It's important to understand the value of transparency... you will open up your books, your bookkeeper may be asked to show their accounting methods. You might be asked for a client list, for a property list, or for your entire CRM. You will be asked the specifics about who does what job, and probably how well they do it and if you would hire them again knowing what you know now. The more details you can give, the more open you are about how things work at your company, the smoother the transaction. Remember, the buyer isn't judging you about how you've run your company, they are focused on how they can best incorporate your company into their existing structure and systems. The easier you can make that for them, the better experience it will be for everyone involved, including you. 

Make sure to pay close attention to the documents that you may be required to provide by the Purchase Agreement. Documents such as a Certificate of Good Standing, a Tax Clearance Certificate and a Bulk Sales Certificate. These types of government documents may take some time to obtain, so be sure to get a jump on them as early as possible. 

Lastly, don't forget your website(s), other digital media and software accounts belonging to the company that you will be transferring to the buyer. These will require your involvement to transfer. Again, the more helpful you can be with these types of details, the smoother the transaction. 

Finally, closing. All documents and monies will go to escrow. Once everything is completed and signed and money is deposited, escrow will complete the transaction. If you are staying on with the new company, know that you will be asked questions and your help will likely be needed through the transition, plan on at least one calendar quarter. 

Remember to take time to celebrate! You've sold your company and have freed up your life to pursue whatever is next for you! Congratulations!

ps. If you want more info, or to discuss the possibility of selling your real estate business, please contact me: [email protected].