Like any other property, having an exit strategy is preferable to a distress sale of a golf course or club property. Unfortunately, many golf course owners and clubs come to us in panic mode and when they’ve compromised their position.
While it’s always best to have documentation together, maintenance items taken care of and accurate financial reporting, there are a few other items that go hand in hand with selling a golf course expeditiously and efficiently.
Pricing
We’ve observed that unrealistically high pricing is the quickest way to have a golf property sit on the market forever. Most buyers are economic buyers and with the plethora of golf properties on the market, those that are grossly over-priced are passed over for better opportunities. If one gets an appraisal, make sure it’s done by a golf specialist and that it’s commissioned specifically for the function of learning an appropriate selling price. Unfortunately, appraisals done by general practice appraisers may not reflect true and accurate market conditions and those done for financing or tax assessment purposes may resort in less than realistic conclusions. Assume that most buyers are relatively sophisticated and they will uncover the facts in due diligence and are unlikely at best to be swayed by any “fairy tale” offering packages.
There are many in the marketplace who suggest a rule of thumb that values equal one (1) times gross revenues. While possibly a starting point in some cases, there are many variables that should be considered. It is strongly recommended that (like any property) the golf course be priced with some room to negotiate but not so high as to scare off potential buyers.
Records
Many daily fee golf courses are family run, “cash businesses”. As such, it is not uncommon for financial records to be less than accurate. If all the revenues can’t be accounted for, as the seller you won’t be credited for them when you sell the property. Nobody will pay you for a “wink of the eye” and the potential that you haven’t realized. Unfortunately, I’ve observed this situation on occasion and it makes a golf course very difficult to sell when the buyer can’t identify what they’re purchasing. Keep accurate and thorough records of revenues and expenses.
Documents
Make it easy for your buyer to do their due diligence. It will save both of you time and money. Have and make available to your broker everything they need to ensure that a transaction evolves smoothly. Items like liquor and pesticide licenses, equipment schedules and leases and water usage permits should be compiled and available and items needed should be summarized in a checklist that can/should be provided by a broker or consultant.
There are other items to attend to, but these are three that take preparation and organization. If you’re using a broker, he/she should be able to assist you in compiling all this information. Be prepared to invest considerable time. It will pay off.