Many purchasers are now looking for signs
of substantial commitment from vendors before walking down the
path of serious due diligence, particularly when they have not
appointed a sole agent, commenced the preparation of a contract
or have engaged any professional advisor.
Over the past ten years there has been a number of examples
where vendors agree to sell their hotel and / or business to a
purchaser only to sell the asset to a third party whom out bids
the original purchaser whilst they are awaiting contracts or
other documentation in order to complete the transaction. This
trend appears to comes not only from a second agent but
regularly from advise by the solicitors or accountants whom have
other clients in the industry. They wish to act as agent, in
some cases causing great financial and legal ramifications for
all parties involved in the transaction, whilst being paid to
undo their handy work.
For this reason many purchasers are now looking for exclusive
agreements or heads of agreements to be entered into to prevent
this “gazumping” practice from occurring, and this practice is
being embraced by reasonable parties as a sign of their
commitment to assisting a successful sale.
Expenses for purchasers often include valuation fees, legal fees
and financial institution application fees together with their
own advisors fees.
Many owners/purchasers in the industry sensibly use law firms
which specialise in hotel matters some firms using different
representatives may end up acting for both parties in a
transaction.
Bligh Williams
