Sell up this year to get a good price, advises BDO

15 March 2010 by
Sell up this year to get a good price, advises BDO

Owners of growing hospitality businesses should consider selling up this year rather than next if they want to get a good price for their venture.

That's the view of corporate finance advisor BDO following research among private equity managers into their attitudes towards the hospitality market.

One in three private equity houses still consider the hospitality and leisure sector to be a poor investment, according to research by corporate finance advisors BDO.

And 40% argued that the value of hospitality and leisure businesses would continue to drop over the next 24 months.

But nearly one in five ranked hospitality in their top three sectors for achieving the highest growth, the same survey showed.

BDO said that the mixed results highlighted the fact that leisure and hospitality was a ‘Marmite' sector for potential investors.

Will Baxter, corporate finance director at BDO said: "Private equity are preparing for huge ramp up in investment activity with over 90% saying they need to increase the rate of investments and close more deals. But leisure and hospitality is the Marmite sector. Buyers and investors either love it or hate it. Knowing the right investors to discuss M&A with is essential."

He added: "Private equity managers say the sales of their older investments were unsustainably low in 2009, with most citing delays of between one and two years, but the forecast for the next 18 months heralds a resurgence of exit activity growing by 53% next year and 76% in 2012.

"With high demand for deals now evident and the emergence of a core of enthusiastic investors in the leisure and hospitality space, owners of growing businesses who are quicker to bring their business to market may get a better price because if they beat the rush next year they will get special attention."

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By Neil Gerrard

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