Closing an aircraft ultimately brings great joy and satisfaction. Right at the start, being chosen as the entrusted broker by a buyer or seller is a great recognition of past work and a good reputation. And the trust will be core to the transaction as it unfolds.
The first potentially emotional topic broached with the client after remuneration is the need for exclusivity. For example, aircraft sellers cab be averse to the idea of exclusively selling through one broker, and careful explanation is needed to show the seller that non-exclusively works against their best interests.
By keeping to one broker, the seller will avoid sending different messages to the market (whether about their aircraft’s history, its status or its pricing). Working exclusively with one broker needn’t trap a seller. They can always negotiate a termination at short notice if they are unhappy with the service they receive.
The offer, the letter f intent (LOI), or the memorandum of understanding (MOU) stage is the basis through which all deals are crafted. Price, payment terms, deposit, allocation of costs and delivery condition are all agreed here. An MOU should be carefully negotiated and drafted, lest it become a memorandum of misunderstanding.
A significant investment of time and energy is required at this stage of the process as documents are prepared and signed. Once the offer is accepted, the purchase agreement is prepared. Patience and teamwork are essential to this complex stage of the transaction.
The broker needs to ensure that all parties and steps are treated in a fair manner, and to the highest industry standards.
Uncertainty and Relief
The purchase agreement will require a thorough pre-purchase inspection (PPI) to be performed by a maintenance center the buyer selects to determine whether they wish to proceed with the purchase or not. The PPI requires the seller to fix any discrepancies that have an impact on airworthiness. There is always an element of uncertainty and fear as to what might be discovered. So the issuance of a clean PPI report is always a relief.
following the PPI, and with all conditions stipulated under the purchase agreement met, the aircraft is ready for delivery. But a deal is only done when cash is in the bank and the bill of sale exchanged. Anything could happen, and you begin to wonder about the unlikely but possible external factors that could unravel the deal. It is necessary to stay vigilant until the end, focus on what really matters and aiming to close as soon as possible.
Finally, on the day of closing when everything falls into place, the buyer is satisfied, and instructions are given to wire the funds, at that moment the funds hit the bank account and another deal closed, joy, satisfaction and relief are experienced. But only for a short time, because the mind quickly turns to the next deal.
Article by: Frederic Dubant (EVP Commercial at Comlux -Advice on both the seller’s side and buyers side in aircraft transactions.)