«Spring 2018

Don't Be Afraid Of Commitment

Six Pitfalls Of A Non-Exclusive Relationship

Aircraft sales brokers talk frequently to owners who believe they are better served having their aircraft represented by multiple brokers rather than committing to an exclusive agreement. They believe this will raise the aircraft’s market exposure, increasing the likelihood of it selling quickly, and result in a more lucrative transaction. However, this is rarely the case.

A leading aircraft broker will typically not enter into a non-exclusive contract. Here are six reasons why you shouldn’t work with one who will.

Exclusivity Counts

Tim Barber, Duncan Aviation Aircraft Sales Representative in Europe, met with an owner who had two aircraft for sale. One was already on the market without an exclusive agreement and the owner was planning to make the same sale arrangements for the second aircraft.

After 30 minutes of research, Tim found that the first aircraft was represented by five brokers at three prices, with different total aircraft hours. One broker even failed to mention the engine programs. “This illustrates the feeding frenzy mentality and misinformation that prevails when an aircraft is released in the market without exclusivity,” says Tim.

Tim secured the exclusive agreement of the second aircraft when the owner learned how his first aircraft was being represented.

In Whose Interest?

With no certainty of getting paid, non-exclusive brokers typically will not invest a lot of time and money to thoroughly represent an aircraft. Because such agreements create competition among brokers instead of buyers, the non-exclusive broker may lean toward persuading the seller to lower the price quickly in an attempt to get the first bite. There is no incentive for a non-exclusive broker to make the effort to ensure that the seller’s best interests come first.

Sight Unseen

Non-exclusive brokers rarely, if ever, conduct an on-site inspection of the aircraft and/or review log book records or meet with the owner or the designated decision maker for the sale. An aircraft’s log book records are very important to the sales process, and you want a representative who will thoroughly review and understand all of the details. If your aircraft is being represented by a broker who has not invested the time to accurately do so, the chance of representation errors is high. This may result in deals falling through, time being wasted, or problems being exposed that give negotiation leverage to the buyer late in the process.

barber
"The variety of challenges presented to you as an aircraft broker ensures that no two days are the same. Meeting clients and prospects and dealing with prospective buyers all bring various opportunities and challenges, so it’s always immensely satisfying to see the results we achieve as a team.”
Tim Barber
Aircraft Sales Representative in Europe

Lose Control

If you enter into a non-exclusive agreement, you are essentially giving up control over how your aircraft is represented, what is being said about your aircraft, and by whom. This loss can result in damage to your aircraft’s reputation in the marketplace. Dave Coleman, Duncan Aviation Aircraft Sales Representative, explains, “The leading professional brokers talk to each other and work together for the benefit of our clients. If we as a group are unable to dispel rumors about poor maintenance, corrosion, damage history, or missing records, or we aren’t getting the answers we need to advise our acquisition clients with confidence, we will recommend to our clients to walk away.” Dave continues, “This is compounded when an aircraft is located in a remote area where communication is delayed. No one wants to go on a wild goose chase to inspect an aircraft that has lots of question marks.”

Under Exposure

Getting an aircraft sold quickly is the primary objective of any broker, exclusive or not. With the business aircraft resale market being very challenging and overcrowded in recent years, you want to make sure your aircraft appears on more than a small website listing. Are they investing their own advertising dollars to get your aircraft on the most visible channels, like

Controller.com and AvBuyer.com? Are they planning any print advertising in leading aircraft sales journals? Do they have a large customer base? Do they have the technical and import/export resources to deal with any surprises? Without these efforts and resources, your aircraft will be largely invisible to many buyers.

Paying More For Dis-service

Everyone wants to obtain the best value possible with their investments. But ironically, a lack of transparency is the result when dealing on a non-exclusive basis. Maybe it means multiple brokers have a hand in the transaction, or an undisclosed back-to-back transaction is contemplated. Therefore obtaining a trusted advisor who stands shoulder-to-shoulder with the seller and provides a full complement of marketing, technical, and regulatory services is, at least, insurance against a costly error, and at most, an opportunity to net tens of thousands more for the aircraft.

Identifying the right aircraft sales broker is time well spent. The right broker will be the one who listens to your needs, advises you on the best course of action, exposes your aircraft in the best manner, and stays with it until it’s done. The right broker is someone whom you trust.

We recommend an exclusive mandate agreement with a professional who has an international team and true global reach. It is the right way to do business. It is how Duncan Aviation does business.

Best Practices

When you are ready to buy or sell a business aircraft, we recommend you look for a broker who is a NARA (National Aircraft Resale Association) member and has committed to following the NARA Code of Ethics.

www.NaraAircraft.com

Case Study

Duncan Aviation Tech Rep Ron Grose Confirms Complicated Aircraft Sale Worth the Hassle

www.DuncanAviation.aero/case-study/aircraft-sales

In This Issue: Spring 2018