Swimming upstream: It’s easy if you are a salmon, but difficult if you are an aircraft broker trying to apply advocacy in many of the emerging markets, laments Jay Mesinger.
Advocating the many benefits of business aircraft is a logical tool to facilitate a successful outcome of the buy/sell transaction. You advocate those activities and concepts in which you strongly believe, and professionals in Business Aviation strongly believe in the products and services they provide. People who are effective advocates know their subject—they are experts in their chosen field. Furthermore, having someone who has the knowledge, experience and professionalism to represent your best interests—i.e., being your advocate—is beneficial.
Advocacy in all its forms—from emphasizing the advantages of Business Aviation to having an aviation professional assist you in buying or selling business aircraft—is not sufficiently embraced in many emerging and international markets, however.
There are distinct benefits of being shoulder to shoulder with an advocate when you are buying or selling a business aircraft. In concept, however, it is understandable why some owners fail to value advocacy, particularly in the international marketplace where the use of business aircraft is relatively new. As many emerging markets became interested in business aircraft, the appetite of the buyer was to buy new. Thus they logically gravitated to the OEMs to source and buy aircraft. There was no perceived need to hire a person or company to assist with the transaction; such a move was considered as adding an extra layer of cost to the process. Paying a broker did not seem to add value.
The economic tides have turned, and now some international buyers have become sellers. But they still may not recognize the value added by professional representation in the marketplace for business aircraft.
Furthermore, international owners new to Business Aviation may not have communicated with, or had the benefit of a relationship with a broker. Locating someone who could serve as an advocate may seem overwhelming.
An interesting dilemma about emerging market prospects is helping the buyer or seller understand the importance of representation. Brokers dealing with emerging markets also might benefit from a primer in advocacy. Advocating the advantages of Business Aviation results in a partnership between broker and client. Even in more mature markets where buying and selling business aircraft has been a mainstay for decades, advocacy and expert representation are essential.
From Theory to Practice
We have an internal document that is 15 pages long, and single spaced I might add. This process list is made up of literally hundreds of individual actions regarding how we can best represent—i.e., advocate for—our clients. In our opinion, the list represents the customary items needed to successfully market, contract, inspect and close on an aircraft for sale. The list is no shorter for an acquisition.
Trying to skip a step or short-circuit a transaction process is just not practical for a successful outcome. Our company has not cornered the market on process steps. There are usual and customary practices that are utilized by sales professionals that understand the need for accuracy and for thoroughness in aircraft sales or acquisition. For example, consider the following list:
• Specification Development: It is imperative that correct specifications are used when marketing an aircraft. Even if purchased new, the development of these specifications is critical to a successful outcome.
• Usual and Customary Contract Development: Aviation contracts are often very different from what a non-aviation transaction attorney is accustomed to drafting or contemplating. The only survivable representation and warranty is that of good title. No other warranties have a life after purchase. Other contract items of critical importance include where the aircraft will be inspected (the seller’s country or the buyers), who pays for the movement to the inspecting facility/country, and what are the terms of the deposit?
• Inspection Protocol: Specify what is accepted in this very important phase of the sale and how invasive the inspection can be. Identify what guides will be used to plan the inspection and what will be the inspection protocol.
• Discrepancy Rectification: Establish who decides to arbitrate the items that are deemed out of tolerance. Define the correct methodology used for the discussion.
• Closing Location: Agree upon the closing location and the conditions surrounding that aspect of the transaction, such as who pays to move the aircraft and where it will be accepted.
The bullet points listed above touch on just a few of the very important details needed to transact a purchase or a sale.
Hence the advantages of having an advocate participate on your behalf are obvious—or at least they should be obvious. To think one can successfully conclude a purchase or sale of a business aircraft without a knowledgeable advisor is flawed or wishful thinking. It simply is not logical. Take the time to ask the probing questions, and do not be afraid to hire someone to guide this process. Find someone you can trust.
Hiring an advocate may seem superfluous, particularly for owners who purchased their aircraft new from an OEM. But the value of expert representation is essential and well worth the investment.
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