Preparing Your Golf Course for Sale

by / Tuesday, 01 November 2016 / Published in Golf - News, In the News, Industry News, Press Releases, Published Articles

par-3-over-waterA golf course owner’s options of holding or selling their golf course must be a pro-active decision. As Golf Course Brokers we advise our clients to consider several factors, including estate planning, tax implications, long and short term investment strategies and the current market conditions. Once the decision to sell is made, owners must be prepared to provide access to the golf course and make available for inspection a certain amount of confidential information in order to proceed with a quick and efficient golf course sale.

Make a Good First Impression

While the physical presentation of the golf course is very important in making a good first impression to prospective buyers, all too often, owners sell themselves and their golf courses short by providing inadequate or poorly organized financial information about their property. Owners may unwittingly limit their attention to only the physical condition of their property and neglect the all-important financial records and statistical data. Most buyers will not waste time with a site visit without first analyzing the course financial performance.

Physical Condition

Buyers will carefully evaluate course conditions, including turf, irrigation, drainage, cart paths, pump stations, bridges, etc. All vertical structures (such as clubhouse, cart storage and maintenance facility) will also be assessed in order to identify necessary repairs and deferred maintenance. A fresh coat of paint on the building exteriors and a trip to the junkyard to dispose of old equipment and cart parts will only enhance the first impression.

Financial Data

At a minimum, monthly and annual reports documenting rounds and membership statistics as well as revenue and expense details should be readily available. Buyers always prefer consolidated operating statements which are supported by departmentalized financial records, consistent with the financial statement presentation supported by the NGCOA.  A current balance sheet will also be required. Analysis of this information reveals historical business trends and can be used by buyers to develop financial forecasts and a pro forma.

Determining Value

The standard golf industry metrics used for evaluating golf course values are (“GRM”) Gross Revenue Multiplier and EBITDA (“Earnings before Interest, Taxes, Depreciation and Amortization”) multiplier. The investment community gives consideration to the CAP (Capitalization) Rate (reciprocal of the EBITDA Multiplier) and IRR (Internal Rate of Return). This information will also be necessary for a qualified golf course broker to provide a Broker’s Opinion of Value (“BOV”) to determine the market price range.

 Organize Your Records

Buyers interested in golf course sales will request a long list of information as part of due diligence. Organizing these documents will put you ahead of the game and accelerate the overall sales process:

  • Recent Survey
  • Permits & Licenses
  • Blueprints
  • Equipment Lists
  • Copies of Leases
  • Function Deposit List
  • Membership Information
  • Club Bylaws and CC&R’s
  • Personnel Records
  • Phase I ESA
  • Blueprints/Floor Plans
  • Maintenance Logs
  • Photographs
  • Service Contracts
  • Marketing Materials
  • Appraisals
  • Employment Contracts
  • Cap-Ex Budget

By providing complete information, prospective buyers are more likely to give their full attention to your property thereby eliminating delays in closing on the golf course sale.

 

Posted  November 1, 2016

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