Simply Marinas team assists with marina sales, valuation, repositioning financials, and positioning your marina for sale
From an article Marina Dock Age requested us to write on Tips on Buying and Selling Marinas
Are there any strategies marinas can now undertake to increase the value of their businesses? Here are some practical suggestions:
- Provide at least three years of financial statements that reflect actual cash flow. The more such financials are readily available the less the delay there will be in selling the marina. Simply Marinas team are qualified to work with marina owners to reposition the financials to come up with add backs to the bottom line that are owner benefits or non typical expenses.
- Explore upside with the buyer: If the buyer has the resources and the motivation to add value to the marina, the buyer may work with the seller to expand in areas that were on the owner’s wish list. For example, the buyer could take advantage of already permitted additional slips. The buyer might add additional revenue streams such as larger fuel tanks, travel lifts, more water dockage for additional slips, more wet and dry covered storage, better configuration of the slips for better and higher rentals, and subleases for retail and contractors.
- Sellers should anticipate a reasonable due diligence period and be prepared to stay on during the initial transition.
- Sellers should provide buyers with a complete package for due diligence, including environmental impact statements, land surveys, additional existing permits, tax assessments and insurance information. When selling a marina, the owner should revisit the marina tax assessment and shop insurance providers. Both of these activities can help add to the bottom line and the overall cap rate.
- Eliminate waste and improve marina efficiencies in order to improve the bottom line. Now is a good time to run a cost saving analysis and implement internal controls.
- Today’s marina buyers include investment funds, international venture capitalists, buyers seeking life style change, and buyers looking for cash flowing businesses in the marine industry. Most are seeking cash-flowing marinas with upside. The price of the marina will be largely determined by its income, location, condition, upside and possible available financing.
If sellers want to get anywhere near a 10 cap for their marinas in today’s market, they have to be willing to provide owner financing for a reasonable term (5–10 years) and low interest rates. The lower the rate, the higher the sale price. When you think of it, this is very beneficial to the seller with investment returns on CDs being two percent or less.
Perhaps the biggest problem or challenge facing some marina owners intending to sell their businesses today is that they have neither the intention nor the financial wherewithal to add amenities or invest in upgrading their marinas.
It takes longer to sell a “neglected” marina than one that is well-maintained and kept up-to-date.
Moreover, the greater the neglect, the longer the time it will take to sell the marina or the lower the price.
The fastest selling marinas will be those marina assets that have good financials and show a decent cap rate. In addition, owner financing and third-party options will expedite the marina sale in a market with strict underwriting standards.