A sale pack answers the questions the seller chose.

A sale pack is written to answer a set of questions, and the seller chooses them. The figures in it are usually accurate. They can still describe a business quite different from the one you would be running a month after completion.

More than once, the information that changed my view of a deal was not in the pack at all. In an earlier note I described one example: an occupancy figure counted by rooms that hid a large share of empty desks. This note is about the questions I ask beyond the pack, what the answers have told me, and the point at which I stop asking and walk away.

Price and occupancy have to be read together

A price per desk tells you what the seller asked for. Occupancy tells you how many customers agreed to it. Read separately, each can look acceptable. Read together, they show whether anyone is managing revenue.

A price is only worth holding if occupancy is where the business needs it to be. When occupancy sits below that level, or falls, and the price stays exactly where it was, there are two possibilities. The operator has made a deliberate decision to protect price at the expense of volume, and can explain it. Or nobody is looking.

I met the last pattern in a sale pack that showed underperforming assets, with no explanation attached. Occupancy was standing still. The list price had not moved. Only when I asked how the sales strategy was set up did an answer come out. The operator wanted to keep its list price. That was the strategy. Nobody on the seller’s side could explain why that price, or why it should hold while offices stood empty.

So I asked why they had not lowered it, even by ten percent, to improve occupancy. The management team began to consider, there in the meeting, that this might have been a sensible thing to do.

That moment told me more than the pack had. The operator sat inside a much larger property group, and nobody had been watching the flex business closely or pushing its sales team to do better. Whatever the market was doing, the underperformance had a cause on the seller’s side of the table. That is also the kind of problem a new owner can fix, and it changes how I value what I am buying.

The enquiry log shows why people did not buy

Occupancy and revenue tell you what happened. They do not tell you why, or whether it will keep happening. For that I ask for the enquiry log: every enquiry, how far it got, and the reason it ended.

On the same transaction, the seller had a complete list of enquiries in its CRM. It was long. It recorded who had asked. Unfortunately, it recorded almost nothing about what happened next. There were no outcomes and no exact reasons for decline. The sales team had not kept it up to date or fully detailed, and management seemed never to have required them to.

I understand how that happens. CRM systems are demanding, and not every salesperson fills one in fully without being asked. The consequence for a potential buyer is still serious. A list of enquiries without outcomes tells you that demand exists. It cannot tell you whether prospects walked away because of the price, the space, the service, the location or the person who showed them round. Those are different problems with different fixes, and without the log you are guessing which one you are buying.

The absence is itself a finding. An operator that does not record why deals are lost cannot explain why its performance is not improving. Neither can anyone buying it.

What surrounds the asset changes what its history is worth

A location’s past performance was earned in the market that existed at the time. Before I rely on it, I want to know what has changed around it: what new flex space has opened nearby or is about to, what it charges, and who it is aimed at. And what the conventional office market in the area is doing: whether leasing is improving or declining, and how rents per square metre have moved over time.

A steady history is reassuring only if the conditions that produced it are still in place. A newer competitor at a lower price, a few minutes away, can change a location’s future more than its history suggests. So can a wider commercial property market in the area that has started to raise questions.

Plan for what you cannot model

The hardest part of any acquisition to underwrite is what happens after completion. A new operator changes things simply by arriving. The brand changes, the team may change, the systems and often the pricing change. Customers react to all of it. And the market does what it does regardless of the plan the deal was priced on.

One acquisition I led completed shortly before the market turned sharply. The assumptions it had been bought on stopped applying within months. My partners and I had to decide quickly, and the decision was to consolidate the two locations that came with it into one. It brought efficiency, and it stabilised the business.

What I took from it is that I now look at a portfolio for its exits as well as its income. Which leases can be ended. Which locations could be merged. How quickly either could happen. Those options are part of what you are buying, and a sale pack will not volunteer them.

When I walk away

A loss-making location is not on its own a reason to walk away. I look at a portfolio asset by asset. If a weak location can be terminated or consolidated soon after completion, the deal can still work, and sometimes works better for it.

The line I do not cross is breakeven. If a location needs more occupancy to break even than the sector can realistically sustain, better management will not rescue it. The lease, the size of the space and its cost base have already decided the outcome. In my experience a healthy location breaks even somewhere between sixty and seventy percent occupancy, measured by desk rather than by room. When a location’s breakeven sits above that range and nothing in the deal lets me change it, I would walk away.

The questions themselves are simple. Anyone can ask for an enquiry log or a price history. Knowing what the answers mean for the price, and which of the problems a new owner can actually fix, is the part that takes having done it.

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