Sometimes in the business world, especially a family owned business, owners decide it is time for selling to the next generation.
The GRP Capital team worked hard with our clients to help them purchase this Florida hotel from their relatives. The price was very good, as is often the case in “arms length transactions”. Our clients are now ready to take over the full management of the property and reap all the revenues. The new owners are excited to do so, just in time for increased American travel.
Reasons for Selling to the Next Generation:
• Current Owners wish to step back: The opportunity for selling to the next generation can be quite tempting. In doing so, the current owners can shed the responsibility of day-to-day management and operation. At the same, time, they also ensure that their younger family members have a path to accrue capital and credit.
• Younger Generation Exhibits Ability to Take Over Successfully: The younger generation is often quite adept at taking over the reins of leadership in their family businesses. Prior to the transfer, these younger owners need to accrue the required equity injection and develop a favorable credit rating. They need to be skilled, albeit young managers.
• Selling to the next Generation Allows for Changes: Sometimes managers and owners need to make changes in order to increase revenue and hold down costs. These changes can be difficult for the older generation to take on. Examples of these innovations include updated software to track purchases and vendors, payroll systems, marketing campaigns and networking with the next generation.
Creating a Path Towards New Ownership:
Managing Partner Krishan Patel stated, “I was happy to help these clients transfer this hotel to the next generation. The younger family members are already highly skilled in accounting and hotel management. This property made it through COVID-19 and promises to provide good cash flow under their leadership.”
This loan took a bit of extra work to close. The loan process started before the pandemic and was paused by the lender. But there was a silver lining. Due to the delay, our client was able to take advantage of the latest stimulus package. GRP Capital worked in tandem with the lender to see the loan through to closing, including underwriting the many other businesses owned by the client borrowers.
Our GRP Capital team specializes in finding the right lender for each project. We save our clients time and money, as we research the best choices for their funding sources. Our experience allows our clients to find funding that is project-appropriate and will allow for sufficient cash flow. If you are considering becoming a first-time (or second or third time!) buyer, we can assist you.