In the late nineteenth century, the Russian physiologist Ivan Pavlov conducted a series of experiments that would become famous in psychology. Pavlov discovered that dogs could be conditioned to respond to a stimulus. If a bell rang before feeding time often enough, the dogs eventually began to salivate at the sound of the bell alone.

The lesson was simple: stimulus leads to response.

More than a century later, Pavlov’s experiment still quietly plays out in unexpected places. One of them, oddly enough, is the management rights market.

Because over time, many vendors develop their own conditioned response.

The bell rings when there are no inspections. The bell rings when there are no enquiries. The bell should then ring when comparable properties in the market are selling (buyers are active). And the conditioned response often sounds like this: “Maybe we should reduce the price.”

The problem is that, just like Pavlov’s dogs, the response isn’t always based on the real cause of the situation. Sometimes the bell is simply noise.

To understand the current market, it helps to step outside the complex gates and look at the broader world buyers are navigating. Over the past few years, the global economic environment has shifted significantly. Interest rates have risen sharply after years of historically cheap money. Fuel and energy costs have climbed, pushing up operating expenses across almost every industry. Inflation has lingered longer than expected, and ongoing geopolitical tensions and conflicts have created uncertainty across international markets.

None of these forces directly change the fundamentals of a well-run management rights business. But they do influence the psychology of investors. Buyers become more cautious. They take longer to make decisions. They scrutinise financials more carefully. Banks apply stricter lending standards. Deals take longer to assemble. During times when the cost of living is a focus, other necessities come into play long before any lifestyle goal.

In short, the market slows its breathing.

That hesitation does not necessarily mean a business is overpriced. Often, it simply means buyers are thinking harder before committing or even enquiring. And given that many management rights purchases represent one of the largest business decisions of a buyer’s life, that caution is understandable.

Most buyers assess a management rights opportunity through a familiar lens: return on investment (ROI). While every business is different, market sentiment in recent times has generally hovered around ten percent ROI as a baseline for buyer interest. The higher the ROI for the buyer, the more interest there tends to be. When the yield pushes toward twelve or thirteen percent, enquiry dramatically strengthens and the buyer pool widens. This is not a rigid rule, and exceptional complexes with long agreement terms, strong letting pools and harmonious body corporate relationships can command lower yields because buyers recognise their stability. But when finance costs increase and economic uncertainty rises, investors naturally seek stronger returns to offset perceived risk.

This shift in expectation is part of the normal rhythm of markets. It is not a sign the industry itself is weakening.

What makes management rights transactions particularly interesting is the complexity of what is actually being purchased. A buyer is not simply acquiring a piece of real estate. They are stepping into a business operation, contractual agreements with a body corporate, a manager’s residence, staff and community structures, and often a lifestyle that blends home and work. Management rights have grown alongside Australia’s expanding strata living sector, where onsite caretaking and letting services support communities and tourism accommodation across the country.

Because of this complexity, the pathway to settlement requires careful steps. Once an offer is agreed, buyers typically move through accounting verification, legal due diligence, finance approval and ultimately body corporate consent before settlement can occur. Even when a buyer is enthusiastic, the process rarely happens overnight. The due diligence and finance stage alone can take months before a deal becomes unconditional.

Patience is often part of the journey.

One of the most important truths in the management rights industry is that there is always a buyer for your business. The real challenge is finding them. Buyers in this sector are not always within a single buyer class. Some are first-time operators chasing a lifestyle change. Others are experienced managers looking to upgrade or expand. Some are investors quietly observing the market while waiting for the right opportunity.

Many of these buyers are what brokers often refer to as dormant buyers. They are not actively searching every day, but they are watching. They wait until something stands out. When the right opportunity appears, they suddenly become very active.

Finding that buyer can take time, but patience should never be confused with complacency. There is a very thin line between strategically exploring the market and simply allowing a listing to sit online collecting dust. Successful campaigns involve active engagement with buyers, conversations across broker networks, ongoing market feedback and constant positioning of the opportunity to mirror the target market. Leaving a business quietly advertised on a website without that momentum rarely produces results. I will often be proactive in my approach and start picking up the phones, targeting dormant buyers to ensure all avenues are explored for a vendor, especially when enquiry is low or even non-existent.

During many campaigns, there is a conversation that occurs repeatedly between sellers and brokers. Enquiry arrives and buyers begin asking questions. They may comment that the multiplier feels high relative to recent sales. They may submit offers below expectation. They may ask whether the vendor has flexibility.

The seller’s response is often relatable. “We’re not reducing. This is a great business and a great lifestyle.”

And very often, that statement is true.

But when similar feedback appears from multiple buyers, something important is happening. That is not negotiation. That is the market speaking. Very few buyers are paying cash and, when this happens, a buyer is hamstrung by their limitations to progress. Finance, valuation, return on investment.

Where this becomes particularly important is when the vendor genuinely needs to sell. Retirement, health concerns, relocation or simple burnout are very real motivations in the management rights industry. In those situations, time quietly becomes the enemy. Because in this market, the longer a listing sits, the harder it can become to sell. Buyers start forming their own assumptions, and there is often an unwanted stigma attached. They may believe a previous deal collapsed during due diligence. They may suspect there is an issue with the agreements or relationships within the complex. They may assume the vendor is unrealistic. None of these assumptions need to be true, but the perception alone can turn a listing into stale inventory.

Momentum matters.

Interestingly, many sellers correctly observe that dormant buyers do exist in the market. Existing managers waiting to upgrade, investors watching quietly or operators not actively searching may all appear when the right opportunity arises. But dormant buyers only activate when something captures their attention. Usually, that happens when the asset is exceptional or when the opportunity feels compelling. If the multiplier sits noticeably above the market, the listing may never trigger that reaction. The dormant buyer never enters the conversation because nothing signals that the opportunity is worth investigating.

This is where the concept of “meeting the market” is often misunderstood. Meeting the market does not mean giving the business away. It means positioning the opportunity where serious buyers engage. It means setting a price that encourages inspections, conversations and negotiations. Once that happens, the pathway to a transaction becomes far more predictable.

Preparation also plays a significant role in how buyers perceive a business. Clear financial records, profit and loss statements verified by industry specialist accountants, well-maintained agreement terms and strong relationships with the body corporate all contribute to buyer confidence. Even the presentation of the complex matters. Clean common areas, tidy gardens and a harmonious relationship with owners signal stability and professionalism. Preparing properly for market often requires assembling detailed financial and operational documentation so buyers can clearly understand the opportunity being presented.

These elements collectively tell the story of the business.

There is a simple principle that often helps bring clarity to these discussions with vendors. A management rights business does not sell when the seller believes it is worth the price. It sells when buyers believe it represents an opportunity. When that balance is achieved, something interesting happens. Buyers emerge. Some arrive through active searches. Others appear through broker relationships and industry networks. Occasionally, the perfect buyer comes from an entirely unexpected place.

But when the opportunity is positioned correctly relative to net profit, agreement term, letting pool strength and comparable sales, good management rights businesses rarely stay hidden for long.

Pavlov’s experiment taught us that behaviour can be conditioned. But it also reminds us that responses can be reconsidered. When the bell rings during a sales campaign, the smartest vendors do not react automatically. They pause, analyse the signal behind the noise and work with experienced professionals who understand the dynamics of the market.

Because in the management rights industry, the best outcomes rarely come from reflex reactions.

They come from preparation, strategy and understanding how the market actually works.

And when those elements align, one thing remains consistently true.

The buyer will always be found.