Historical Financial data

Historical Financial data

This sector of the Management and Letting Right (MLR) market (holiday and corporate letting) has been the most affected by the COVID-19 pandemic and Government imposed restrictions, lockdowns, state and international border closures.

The Government imposed restrictions, lock downs and border closures has had varying effect on MLR businesses across Queensland. Unexpectedly, some areas benefitted to the point that profits and occupancy more than doubling pre COVID-19 period.

A significant ‘spike’ or ‘decrease’ in the Net Operating Profit for businesses has posed many challenges for buyers and valuers. What is ‘fair market value’ in these situations is and can be very difficult to ascertain.

Interestingly, where Accountants are able to provide more than the traditional one (1) years’ trading the deal will generally go smoothly without scrutiny.

Where there are more than 1 year’s financials provided in Accountant verifications, what is the benefit to buyers, advisors, bankers (who lend the money), valuers etc?

• Provides certainty of trading
• Letting pool security
• Statistics for revenue, occupancy and average tariff

I am sure some Vendors might ask; why should I provide multiple years trading, because when I purchased the business there was just one (1) years’ financials?

Perhaps one reason has been the severe impact of COVID-19 pandemic and the Government imposed restrictions and border closures. No doubt that this has been the cause of a bit more uncertainty in the marketplace.

One question buyer’s might be asking of the business; Is this income sustainable?

Multiple years profit and loss trading takes this ‘uncertainty’ out of the equation and what it just might do, is achieve a better multiplier for your business.

Therefore, if the Accountant requests more than 1 year’s financials the it may be in your best interest.

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