Two Forms of Resort Buyers

We often hear of sale and transfer of leasehold rights of resorts in the Maldives. We also hear of transfer of shares of companies holding resort leases. In our experience, we can easily divide the buyers into two distinct categories.

Strategic Buyers and Financial Buyers.

A strategic buyer is in broader terms a competitor. They may be in the same business, same market, or even in same segment as the seller. They may be buying for a whole set of reasons: expansion, growth, diversification and synergy.

A financial buyer is one who buys simply for the money, financial returns. They hope to take over an asset, turn it around, and make good returns.  They have no emotional attachment to the business. Their only interest is in making favorable returns for their investors.

Traditionally, for the longest period of time, Maldives resorts had been bought by parties that could be summed up as strategic buyers. However, in more recent times, role of financial buyers is increasing in the Maldives tourism industry. Main reasons may be attributed to the following: number of bleeding properties; difficulty in obtaining bank finance; reaching exposure with banks; and bank financing being just too costly.

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