What Buyers Look For in an Event Venue

The calendar is the business

Buyers want to see bookings by date, going back several years and forward as far as the calendar runs. They compare how many dates were booked at this point in each prior year with how many are booked now. That comparison is called booking pace, and it shows whether demand is growing, flat or slipping. A venue that fills its peak weekends a year ahead and struggles on Fridays and Sundays has a different story from one that fills everything with discounts.

The mix of events matters as well. Weddings pay well and book early, and they carry a lot of emotion and a lot of cancellations. Corporate events book later, repeat more often and fill the weekdays. Social events such as birthdays, showers and memorials fill the gaps. A buyer will look at what share of revenue comes from each and ask which one is easiest to grow. A venue that has leaned on a single wedding planner or a single corporate client for much of its calendar will get questions about it. Our post on customer concentration covers how buyers react.

Pricing deserves a look before you list. If your Saturday rate has not moved in years, a buyer will see room to raise it, which is a point in your favor, though a buyer who suspects the rate cannot move will not give you credit for it.

Deposits and what they mean in a sale

Most venues collect a deposit when a date is booked and a final payment before the event. On the day of closing, the venue holds money for events that have not happened yet. A buyer takes over the obligation to host those events, so they will ask for a full list of future bookings, each with the amount paid, the amount due and the contract terms. How the deposit money is handled at closing is negotiated, and it is often handled by a credit to the buyer or a transfer of the cash. Your accountant will want to review it with ours well before an offer.

Clean books matter here more than in some trades. Revenue recorded when the deposit arrives and revenue recorded when the event happens produce different profit for the same year, and buyers will ask which method you use. Read our post on getting financials ready for a buyer and talk to your bookkeeper about it.

Refund and cancellation terms in your standard contract are worth a read too. A buyer will check whether the contract lets a couple walk away for a full refund, and will want to know how many have done so recently.

Catering, bar and the vendor list

How the venue earns money on food and drink changes its value. Some venues run an in-house kitchen and charge for catering. Some require couples to use an approved list of caterers and collect a fee. Some allow outside caterers freely and rent the space and the tables. In-house catering usually brings more revenue and more risk, because it needs a chef, kitchen staff and food cost control, and a buyer will check that you have all three.

A bar program adds another layer. If you serve alcohol under your own license, the license is something a buyer will look at carefully, since it normally has to be applied for again or approved for transfer by the state or local authority. Rules vary by state and your attorney confirms what applies. If couples bring their own bartender, the venue still has insurance and rules for it, and a buyer will ask to see them.

Preferred vendor relationships with photographers, florists, rental companies, DJs and planners are part of the value. Many of these send business to the venue, and the venue sends business back. A buyer will ask how these arrangements work, whether they are written down, and what they pay in referral fees, if anything.

The building, the grounds and the lease

Buyers walk the property with a list. The roof, the heating and cooling, the restrooms, the kitchen equipment, the parking surface, the lighting, the sound system, the tables, the chairs and the linens all get a look. A venue that has been kept fresh will command more than one that is a season away from a large repair. Expect the buyer to ask about the certificate of occupancy, the maximum guest count, noise limits and any complaints from neighbors, because a venue that cannot host a loud party at night has less to sell.

If you own the building or the land, the real estate can be sold with the business or leased to the buyer, and the choice affects price and financing. See our post on real estate attached to the business. If you rent, the lease needs enough remaining term to cover the buyer's loan, and the landlord has to consent to an assignment. Our post on the lease as part of the deal walks through it. A special use permit or similar approval attached to the site is worth a conversation with your attorney early.

People, reputation and records

Most venues depend on a small team: an event manager, a day-of coordinator, a sales person who gives tours and a few people who set up and clean up. Buyers look for who holds the relationships with couples and planners. If you are the person who shows the space and answers every inquiry, the buyer sees a business that stops when you leave. Our post on owner dependency shows how to hand that off.

Reviews on wedding sites and search engines carry a lot of weight in this trade, since couples read them closely. A buyer will check your rating, how recent the reviews are and how you answered the bad ones. Hold on to your website, your photo library, your social accounts and your email list. They belong with the business and the buyer will expect them in the sale.

For records, plan to produce tax returns, monthly profit and loss statements, a balance sheet, the booking calendar and payment ledger, a schedule of deposits held, the standard event contract, vendor agreements, the lease, insurance policies and claims history, and a list of equipment and furniture with age and condition.

What tends to sink a sale

Venue sales go wrong in familiar ways. Deposits were spent and cannot be passed on. The calendar looked full because of heavy discounts. The liquor license could not be moved on the buyer's timeline. The owner was the only person who closed tours. A neighbor filed a complaint during the buyer's visit. Staff learned of the sale and left in the middle of the busiest season.

We market venues without naming them, and a buyer signs a nondisclosure agreement before seeing anything that identifies the property. Couples with future dates should not hear about a sale from a rumor, and our post on how we market a business confidentially explains how we handle it.

Getting ready

Start by cleaning up the calendar and the deposit ledger so they agree with each other and with the books. Update your standard contract. Fix the deferred repairs that guests can see. Write down how a tour is run, how pricing is set and how a day-of event is staffed. Keep reviews coming. Then ask us how buyers are likely to read your numbers. At Business Advisors of America we start with a valuation based on your own calendar and books, and the page on selling an event venue is a good place to see how we approach it.

This article shares our opinion and general information. It is not legal or tax advice. Always speak with a licensed attorney for legal advice, and a qualified tax professional for tax questions, before you act.