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Family Office Elite Magazine, the wealthiest audience in the world. Family Office Elite Magazine is a very high class bespoke publication and a porthole to the ultra-wealthy family offices and UHNWI sectors. The magazine includes editorials from recent events and experts from the ultra-wealthy Family Office community.
Family Office Elite Magazine, the wealthiest audience in the world.
Family Office Elite Magazine is a very high class bespoke publication and a porthole to the ultra-wealthy family offices and UHNWI sectors. The magazine includes editorials from recent events and experts from the ultra-wealthy Family Office community.
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looking at those that are for sale but going beyond that<br />
and seeking out the ones that are likely to be entering<br />
the market over the coming months. The next step<br />
is to streamline the number of options, eliminating<br />
individual aircraft for a multitude of reasons – age,<br />
hours, maintenance history, installed options, paint<br />
and interior condition and so on. Eventually, you’ll have<br />
a shortlist of perhaps 3 or 4 aircraft.<br />
These aircraft have to be close to what you are seeking;<br />
they need to “tick most of the boxes” otherwise you’ll<br />
have doubts further down the line by which time you’ll<br />
have invested time, energy and money into the venture.<br />
You certainly don’t want to be having doubts once you<br />
are committed to the legal process. Your advisor will<br />
then review the aircraft and, more importantly, the<br />
logs and maintenance records and once this has been<br />
done you be presented with the final selection. At this<br />
point, you will probably want to invest the time to look<br />
at the aircraft, but you may opt to view a selection<br />
from the short list. You may also choose to undertake<br />
a test flight at your own expense at this stage although<br />
some owners will only permit this once they have an<br />
agreement on price.<br />
Once you are happy that you have the correct aircraft,<br />
then it will be necessary to submit a Letter of Intent<br />
(LOI) in which you state the price you are willing to<br />
pay and any other conditionality. Prepare for this to<br />
be countered before a deal is agreed. Sometimes this<br />
part of the process will be ahead of viewings, and an<br />
experienced buyer may be happy to rely on the next<br />
few steps to secure them the right deal without ever<br />
viewing the aircraft.<br />
Within the LOI there will be a commitment to pay a<br />
percentage of the purchase price within a specified<br />
timescale; this is typically 5% to 10% with 3 or 4 days.<br />
The deposit is usually placed into escrow and remains<br />
refundable through until you technically accept the<br />
aircraft.<br />
The LOI becomes the basis for the Aircraft Purchase<br />
Agreement (APA), also known as the SPA, which should<br />
be prepared by a specialist aviation lawyer. The<br />
contract will cover all of the points addressed within<br />
the LOI, along with the warranties, repositioning cost<br />
responsibility and conditionality for the PPI, the detail<br />
of the PPI process itself and any other conditionality<br />
that you have stipulated and agreed upon with the<br />
seller.<br />
The aircraft then moves to pre-purchase inspection<br />
at a mutually acceptable location during which a<br />
comprehensive assessment of the aircraft will be<br />
carried out in line with the standards specified within<br />
the LOI and SPA. Any airworthiness items found will<br />
be rectified at the cost of the seller, but any cosmetic<br />
issues will be down to you unless agreed otherwise. In<br />
some cases, the cost of such remedial work could be<br />
significant, so it’s important that you have professional<br />
support on board.<br />
With the PPI complete and all technical issues resolved<br />
you are ready to technically accept the aircraft and at<br />
this point your deposit becomes non-refundable, so<br />
it’s a very important step in the process. Sometimes, in<br />
order to expedite the completion process, there may<br />
be a mutually agreed adjustment to the transaction<br />
price to allow for the remedial actions to be concluded<br />
by the buyer after the deal has closed. This can be to<br />
everyone’s benefit but make sure that your advisor<br />
manages this process well to avoid any surprises.<br />
Deal closing can then take place within days or a few<br />
weeks and at that point the balance of the purchase<br />
funds will be released to the seller, and you take<br />
delivery.<br />
To maintain some semblance of brevity I have had to<br />
ignore a lot of detail – the purpose of using an escrow<br />
account, the closing call, ownership structuring and<br />
many more nuances of a very complex and timeconsuming<br />
process. There is also a plethora of postclosing<br />
details, but perhaps that’s best to save for a<br />
subsequent article.<br />
So, to conclude; choose the right professional partners,<br />
find the right aircraft and look forward to enjoying your<br />
purchase but whatever you do, don’t rush it or think<br />
you’ll benefit by saving the odd thousand dollars here<br />
and there.<br />
Tim Barber is the Senior Vice President – Private Jets<br />
for Cabot Aviation, a subsidiary of Air Partner +44 1293<br />
844 759 - tim.barber@cabotaviation.com.<br />
WWW.FAMILYOFFICEELITE.COM<br />
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