“One of the biggest issues we have is sellers who hang on too long. The boat ends up selling for 30-40 per cent less than their first offer,” voiced Kevin Merrigan at the 2015 Fort Lauderdale International Boat Show, concerned at the number of yachts that overly ambitious sellers were still paying to run at the opportunity cost of accepting an earlier offer.
SuperyachtNews caught up with Merrigan, CEO of Northrop & Johnson, at the 2016 show to see if anything had changed a year down the line. “Until 1 November this year the brokerage market has been down from last year, but recently we’ve seen owners adjusting their prices correctly to address that issue,” he begins. “So here we are at the end of the year and the intelligent owners are saying ‘I don’t want to go into 2017 with this yacht on my books. I want to cash out now and I want another yacht’ – hopefully!”
Alluding to a good example of a late pricing adjustment, Merrigan points to a yacht on Northrop & Johnson’s books, 53m M/Y Passion. “Passion was asking in the upper teens when she was first listed for sale, but the owner wasn’t quite done with her; the family was still enjoying the yacht, but they wanted to test the market. Fast forward a year and the owner has said ‘I’ve had my fun, it’s time to sell, I want someone else to enjoy the yacht’, so he adjusted the price to $11.95 million.”
But what has caused this shift in pricing? “We always have to manage owner expectations correctly,” continues Merrigan. “A lot of owners are experts in their own fields and sometimes they believe this translates into yachting, but yachting is a ‘cottage industry’ and doesn’t necessarily have the depth of their businesses, so the folks that are professionals in superyachting have a much better eye and understanding. For a lot of owners, it takes time to understand how the market works”.
With 142 employees in 17 offices, Northrop & Johnson has a global reach, but it’s Australia and Asia that Merrigan thinks will “surprise us” and be the strongest growth regions. “We’re prepared for growth in any part of the world. America controls 60 per cent of the market and I suspect that won’t change anytime soon and I think the Russian and European markets will fluctuate around their economies.”
One thing Merrigan urges the brokerage market to focus on is simplifying the buying and selling process. “We’re overcomplicating it,” he says. “Sale and purchase agreements have gone from two pages to 20. The likes of ISM and MCA classification are good things, they’re wonderful things, but they need to be managed correctly so that the owner does not have to worry about how to make the sausage. You want to enjoy the sausage and not have to get in there and see how the sausage is made.”