Preparing your wedding venue for sale
As most wedding venue owners sell quietly through word of mouth, the price they obtained for their venue and the process they followed tend to remain a closely guarded secret.
Some sell through an agent or broker, where a portion of the fees you pay will be for their expertise in guiding you through the process.
This piece is for owners who wish to sell directly.
It provides a broad 5-step guide on preparing your wedding venue or boutique hotel for exit in a way that minimises disruption, obstacles and risk while maximising value, integrity and contentment.
Step 1. Get comfortable with the decision to sell
You will feel a huge emotional attachment to your wedding venue; it’s likely something you’ve built over many years, perhaps even a family home turned business. I understand and respect those feelings, which is why my first piece of advice is to be confident that selling your venue is a decision you are comfortable with.
The multiple varies depending on the sector, and the confidence in the market. The standard range is currently between 6-10 x EBITDA for wedding venues, depending on numerous factors. Many venues are owner-operated and have grown organically over many years, with accounting practices leaning towards tax efficiency rather than improving the EBITDA. Adjustments will be made to “normalise” the accounts, so there is no benefit in spending time and money in massaging the EBITDA before getting a valuation.
A change of ownership can significantly benefit all parties and stakeholders, but natural alignment is the key to finding such a positive outcome. The seller and purchaser must be committed to the transaction and the high levels of trust, honesty, discretion and respect needed to ensure a positive process.
Depending on the type of venue, the business value may be more, or less, than the property value. For example, for an impressive country house in a large estate, the property value is likely to be significantly higher than the value of the business, but for a successful rustic barn venue with a full diary of future bookings, the business value may be higher than the value of the barn and its surroundings.
Ask yourself, am I ready to move forward and realise the value I’ve built?
Step 2. Prepare you paperwork
After deciding that now is the time for a new chapter in your life, you begin to look objectively at your business practices. Due diligence can feel daunting if you are experiencing it for the first time or have chosen an unreasonable transaction partner. However, it can also be a relatively straightforward process if you can clearly present your business and explain your rationale when looking at past or current decisions.
My advice is to give your business a bit of a grilling. Do you really do all the things you say you do, and can you demonstrate it?
I could talk at length about the various areas of due diligence and will do in a future post. Still, for now, I have bulleted most of the key areas that will be explored in your business if you are working with a professional purchaser.
Financial - accounting, revenues, balance sheets, tax & policies
Employees - contracts, training, structure, disputes, pensions & right to work.
Regulatory - health, fire and food safety, GDPR, DDA, SOP manuals, privacy, structural, asbestos, EPC & EICR
Legal - titles, planning, licences, property valuation & insurance
Client and third-party agreements - contracts, relations and risks
In theory, all of the above and more should be present and correct in our businesses, but as an experienced operator and realist, I know there will be gaps. The due diligence checks of a credible purchase partner will find these gaps and likely others, so my advice is to be proactively honest, explain the gap, discuss options and find a way forward together.
An emotionally mature purchaser will appreciate your candid approach and work with you to support the due diligence process, assuming that you know your business and treat the relationship with the mutual respect it warrants.
Step 3. Prepare your team
Your house was already or is now beginning to be in order, so it’s time to turn to your team. Typically, there are two things to address here.
You feel that these people are like family to you and want to ensure they are looked after and nurtured in their roles.
You could well be the pin that holds everything together.
To address point one, if this is how you feel, you must select your purchaser based on a combination of their offer, values and aspirations. This is also true of the sale in general. If you care for the team you have created and wish them future success at your venue, be sure to research your purchaser. Are they the type of people that can demonstrate the ability to provide exceptional experiences for teams and clients alike? If so, your conscience is clear, your team will be enhanced, and the relationship with the purchaser will be enjoyable.
Now to point two, You being the glue works for your business but can often be unattractive to potential new owners. If you walk out the door and the place falls apart, that is a problem and that problem results in lower-value offers for your business. Many purchasers are not looking for a fire to fight. Suppose you demonstrate that your team is relatively self-sufficient with documented training and procedures; your business becomes more attractive in a busy marketplace. So, it is time to train, empower, coach and succession plan like you’ve never done before. Start to prepare your business to function without you, don’t be proud, be smart.
Step 4. Think, “What would a purchaser want”
You’ve likely grown your business by understanding what couples want, so take that ability and apply it to a theoretical purchaser. Most purchasers, including myself, want a long list of things, but the principles typically the same as we want the purchase process to be:
Straightforward
Fair
Respectful
Professional
Enjoyable
Rapid (while maintaining the items listed above)
Beyond this list of principles is where it gets interesting.
Personally, I prefer purchasing venues that have a 9/10 something with some 4/10 areas than a venue that’s 6/10 everywhere. I would also urge you to theoretically invest the money you may not have. For example, if you know your venue would benefit hugely from an outdoor ceremony space, a new build orangery and kitchen, I would advise you to obtain full planning for precisely that. If a purchaser can buy a venue with planning in place for the business that they have the means and ambitions to build, you have de-risked their investment and will be rewarded with a faster, simpler sale alongside a premium for your venue.
“For us to partner harmoniously during the sale, our motivations must naturally align..”
Step 5. Seek a partner you feel you can trust
In step 1 I suggested that you ask yourself, “am I ready to step away and realise the value I’ve built?” Now you must ask, “who will I trust with my business, team and clients?”
You know yourself, your business, clients and team. You know how you like to work and how well you’ve prepared the business for its sale. That insight is powerful and allows you to connect with purchasers that align with your values and are equipped to support your needs in the transaction that will kickstart your next chapter. So, for example, if discretion is important to you and you’re a little daunted by the prospect of selling, find a partner where discretion is second nature and who has the experience, contacts and desire to support you as you need it.
My advice here is simple, if either party has to consistently flex, submit, convince or compromise, then the deal should not be done, as at least one party has chosen the wrong partner. Motivations, respect, ambitions, sincerity and values matter whether the relationship will be short (seller & buyer), medium (couples) or long-term (team members and suppliers).
Securing the transaction to completion should feel like a team effort where each party works towards a shared goal, displaying similar values while working to the same high standards.
Summary
Selling your venue is an emotional business decision. However, it can be a liberating, educational and enjoyable experience if you prepare well and select the right purchaser.
You don’t need to spend endless years or months preparing your business to sell. As a recovering perfectionist, I assure you it won’t ever be ‘ready’. My advice above is quite enough, as, beyond that, you are likely to see diminishing returns on your time investment. Still, you MUST know your business, particularly in the areas outlined in Step 2.
Once you are ready to sell, spend some time on Steps 2, 3 & 4 because the right amount of energy here can add or protect real value. One way your business will be valued is by a multiple of EBITDA. Depending on the state of play, these points can impact the range from a six times multiple to 10 times.
If you’re reading this, it’s likely that you’ll already know that Xenia Venues live the values of discretion, integrity and professionalism. You’ll also know that I have a track record of building commercially successful businesses with a sustainable and ethical approach that puts client experience and wildly successful teams at their centre.
If you feel that Xenia Venues could be your business's future steward, feel free to reach out to me privately. All conversations are treated in strict confidence.
Written by
James Matthews
With many years of experience in operating wedding and hospitality venues, James is the Managing Director of Xenia Venues. He helps assess whether a venue has potential to be owned and operated by Xenia Venues, and if so, he works closely with the venue owners to assist them in a fair and simple venue sale and transition of ownership.
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