When is the Right Time to Sell ?
Image Credit: Jodie Hurd Photography
Establishing the Right Time and Method to Sell your Venue
Wedding venue owners tend to have the same anxieties and questions when considering departure:
‘How do we sell discreetly to avoid couples cancelling or staff leaving?”
“Will a new owner care for our teams and our couples in the way we have?”
“How do we get a fair value for the company we’ve built?''
We don’t claim to have all the answers, but here are some thoughts that might help venue owners understand their options.
The Right Time to Sell?
The reasons that keep you in your business are often the same ones that make you want to leave: uncertainty, turbulence, and change.
First, there were closures, postponements, and cancellations due to COVID-19.
Then, there was a shortage of staff in the hospitality industry.
After that, the rising energy and cost of living created a crisis.
Next, you can expect the cost of debt to increase, reduced funding options, and unstable property prices.
In addition, the Law Commission is making changes to the Marriage Act, leading to increased competition from pubs, restaurants, boats, and marquee venues.
While you want to be a source of reassurance for your team and couples during challenging times, there may come a point when you want to retire, move to a new home, or change careers.
“With future wedding bookings to consider, your exit will take some planning. However, if you are selling your venue as a going concern it is normal practice to agree a price and exchange contracts, so that both parties can make plans but weddings aren’t disrupted, and then complete the transaction at an agreed date at a quieter time of year.”
The good news is that weddings will always be in demand, and if you have a sustainable and desirable venue in the right location, your business will always hold value.
To sell your venue at the right time, for the best price, and with favourable tax considerations, it's essential to plan ahead and find a compassionate buyer who understands and respects your needs as a business owner looking to exit.
Should you sell as a residential house?
If your wedding venue started as a private home or farm and gradually began hosting weddings, you should consider whether its value lies in being a residential house or a wedding venue.
If any of the following situations apply and are unlikely to change, it may be better to sell the property as a residential house:
You don't have the necessary planning permission and licenses to host weddings commercially throughout the year.
Your home lacks the required infrastructure to accommodate weddings on a larger scale.
Your neighbours have ever complained about the noise or increased traffic caused by weddings at your venue.
Before selling, make sure you fulfil all contracted weddings. This means accepting deposits only for weddings that you know you can deliver and delivering all the weddings you have accepted deposits for. It's important to avoid canceling couples' weddings as it damages confidence in the industry and could lead to a claim for consequential costs, even if you refund their deposit.
Be prepared for potential cancellations and the possibility of losing staff if your couples and team become unsettled when the property is put on the market. Many estate agents have the option for "off-market" sales and maintain a list of buyers who prefer discreet transactions, however the only way to manage the number of people that know your property is for sale is to be the one that chooses who you tell.
It needs forward planning and will mean some lost earning potential, but the safest option is to fulfil all your bookings before instructing an estate agent.
Should you sell as a business?
Selling your established wedding venue as a business is often the most profitable approach. You not only receive a premium for the business you've built but also the value of the property itself.
This method allows you to avoid canceling weddings or laying off staff.
If the following conditions apply, selling as a business can lead to a better price and a smoother transition:
You have a reasonable number of future bookings, including weekdays as well as weekends.
You consistently receive new bookings.
You have the necessary planning consents to operate as a wedding venue.
Your venue is popular and financially viable.
The buyer will need a clear understanding of what they are purchasing. Therefore, the due diligence process is more complex than a typical residential sale. Alongside surveying the property and checking the title deed, the buyer will review employment contracts, bookings, reputation, accounting practices, and health and safety records. They will also require a comprehensive inventory of all the furniture, fixtures, and stock included in the business sale.
Selling through wedding venue estate agencies
There are estate agents who specialise in commercial properties like hotels, pubs, and restaurants, and the larger estate agencies have a separate departments for hospitality properties, but no agents in the UK specialise specifically in wedding venues, so no obvious starting point.
There's a simple explanation for the lack of wedding venue agents. Unlike other businesses in the hospitality industry, weddings are typically booked well in advance, sometimes over a year ahead. When a wedding venue is put up for sale publicly, its value decreases because couples lose confidence and may cancel their bookings. Additionally, the venue's team may start seeking more job security elsewhere. Without bookings, there's no business to sell, or in a worse scenario, there are a few weddings left to handle but no team to manage them.
Instead, wedding venues are typically sold direct to someone else in the industry through word of mouth. It's important that the buyer, like the seller, values discretion and upholds high standards and values. In such cases, there's no reason for couples or employees to be aware of or concerned about a change in ownership.
Selling direct to industry
To ensure that the pipeline of wedding bookings remains intact, and that deposits won’t need to be returned or contracts cancelled, most wedding venue sales take place within the industry. Wedding venue owners with a good relationship other individual venue owners may find a potential buyer through word of mouth, but it is a commercially sensitive topic to raise without being absolutely comfortable with the information that will inevitably need to be disclosed.
Instead, most venue owners find it safer to approach a larger operator who’ll have access to accurate valuation information and has a vested interest in complete confidentiality for the benefit of future transactions.
In summary
If you have worked hard to develop your venue business and care about your team and couples, you will want to find a trustworthy buyer who will treat your business ethically and maintain its long-term success. They should offer you a fair price, handle the sale confidentially and with complete discretion, and be capable of building upon the foundation you have established.
Written by
James Matthews
James has been involved in developing a number of wedding venues including most recently, the impressive Clevedon Hall in Somerset. He works closely and compassionately with venue owners to establish the value of their wedding venue business to give them options when they are ready to exit.
More Articles:
