What It Really Takes to Fund a Management Rights Business
Syd Douglas & Paul Grant
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When it comes to financing a management rights or accommodation business, many buyers assume it’s similar to securing a home loan. But in reality, it’s a different world entirely, one that requires a sharp understanding of the asset class, deep industry connections, and a broker who speaks the language of banks and buyers.
In a recent interview with Ras360’s Syd Douglas, Paul Grant Senior Finance Broker at Mike Phipps Finance shared his journey, process, and hard-won advice from over 15 years working exclusively in the accommodation sector.
Why Finance in This Industry Is Different?
“Management rights are a niche asset class with many moving parts,” Paul explains. “There’s no cookie-cutter formula. Each deal is unique, and the bank’s appetite depends on everything from the buyer’s background to the specific terms of the letting agreement.”
This complexity is exactly why Paul insists on early engagement. Rather than getting involved once a contract is signed, his team prefers to work with buyers upfront clarifying their borrowing capacity, refining their budget, and even helping them understand which types of properties best fit their profile.
Busting the Pre-Approval Myth
One of the most common misconceptions Paul encounters is around pre-approvals. “There’s no such thing as a meaningful pre-approval for a management rights business,” he says. “Banks won’t formally approve a deal until all the information financials, agreements, buyer profile is on the table. Anything you get beforehand will come with a laundry list of conditions.”
Instead, Mike Phipps Finance uses a rigorous pre-qualification process that mirrors how banks assess deals. “We run the numbers using bank models. If it works, we back ourselves to get it approved,” says Paul. “That gives buyers confidence and saves time and money.”
What Banks Are Really Looking For?
Paul simplifies a bank’s decision-making into three pillars:
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The Buyer: Who are they, what’s their experience, and how well do they understand the business they’re acquiring?
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The Deal: Does the business stack up? Are the financials sound? Are there any red flags in the agreements or compliance?
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The Numbers: Does the buyer have the equity and cash flow to support the debt? And is there enough wiggle room if interest rates move?
“We don’t just present a loan application, we craft a story,” says Paul. “And it has to be a compelling one.”
Partnerships, Syndicates & Scaling Up
Beyond traditional individual purchases, Paul also highlights the rise of syndicates and joint ventures in the space. “You might have one party bringing operational expertise and another bringing capital,” he notes. “As long as everyone knows their role and there’s a clear partnership agreement, these models can be incredibly effective.”
Paul’s business partner Mike Phipps Finance even offers a matchmaking service to connect like-minded investors and operators.
The Three Essential Tips for Buyers
Paul wraps the interview with three key tips for anyone entering the industry:
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Don’t Chase the Unicorn: Perfect businesses rarely exist. Know your must-haves, but be flexible where it counts.
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Get Organised: Have your financials, CV, tax records and asset statements ready before the bank asks.
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Use Experts: Work with specialist accountants, lawyers and finance brokers. It might cost more up front, but it saves tens of thousands in time, mistakes, and missed opportunities.
The biggest takeaway from our time with Paul? Financing a management rights business is not just about interest rates and loan terms. It’s about strategy, relationships, and storytelling. And with the right expert in your corner, the process doesn’t have to be intimidating it can be empowering.