Transitional Golf Management for Asset Valuation
A transitional management strategy is often required either leading up to or following some sort of trigger event – like a purchase, sale or foreclosure. Usually these events have to do with the valuation of the club before a sale or ramping up service levels after a purchase.
Pre-Sale Preparations & Cash Flow
Leading up to the sale of a facility, there are many things that can be done to improve or preserve the value of the asset.
While every circumstance is different, golf clubs are normally valued on some sort of multiple of gross revenues or EBITDA: Earnings before interest, tax, depreciation and amortization.
EBITDA is a standardized measure of a company’s operating performance.
Transitional golf management serves to preserve or improve asset valuation pre-sale, post-purchase or in foreclosure lender-owned situations.
Quick Wins on the Expense Side
A management company will be able to critically evaluate all club financials and operations to find quick wins to help improve performance ratios. We find that the majority of these quick wins occur on the expense side.
Loose procurement practices may have allowed costs to steadily creep upward over time. Depending on urgency and how much lead time we have, we may be able to negotiate more aggressive rates through improved buying power.
From a membership equity and legal perspective, the contractual obligation to pay back equity members when they leave the club is another major source of concern with buyers.
When memberships are selling for $10,000, but there’s an exit list of members who are owed $25,000 each, that presents a substantial liability.
In many cases, we’ll work to erase these liabilities by crafting new language according to member bylaws.
Understanding what buyers are most interested in, and where they’ll typically be pushing back helps golf club leadership to make the appropriate accommodations leading up to the sale of a property.