When a property owner comes to a decision to sell, or wishes to explore the possibilities of a sale, the choice of how to approach the market can have far-reaching consequences. The decision will ultimately be between a Structured Sales Process and an Off-Market Approach. I enumerate here the main advantages in choosing the latter.
A Structured Sales Process is an elaborate undertaking, involving a lot of upfront work, draining the owner’s time, and creating a substantial distraction from core business activities. An Off-Market Approach, by contrast, takes up a fraction of the time, allowing the owner to engage seriously only when a desired result is foreseeable.
An Off-Market Approach is inherently more meticulous in matching the unique characteristics of the investment opportunity with the specific investment criteria of select investors. It is the difference between casting a net and using a laser.
Owners have various concerns which require discretion.The desire to sell, or test the market, without alerting stakeholders, lenders, local government, etc., is a delicate balancing act.
The Off-Market Approach allows a property owner to discreetly gauge the market without making waves.
A Structured Sales Process usually requires the investor to decide on terms in advance.An Off-Market Approach allows the owner and prospective buyer more flexibility in agreeing mutually acceptable terms in matters such as Share vs. Asset deal format, timeline, due diligence, exclusivity, and closing.
Engaging a large brokerage house inevitably means that the dossier will pass through many hands, which naturally results in a diminished possibility of maintaining confidentiality. An Off-Market Approach allows the owner to enjoy a single point of contact with a professional broker.
Approximately 30% of the world’s most prominent institutional investors are unwilling to consider investment opportunities in the context of a Structured Sale Process. Analyzing investment opportunities is time consuming and often expensive. Investors are willing to pay premiums to avoid these inefficiencies.
Whereas large brokerage houses disseminate information freely and widely, in an Off-Market Approach the property owner controls the flow of information, approving in advance all ultimate recipients of the investment memorandum.
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