Selling a Fishing & Hunting Lodge, Marina or Resort Business to Employees
Management Buyout
A management buyout involves the management team pooling resources to acquire all or part of your fishing & hunting lodge, camp or resort business. A management buyout (MBO) is appealing to professional managers because of the greater rewards of being an owner of the business rather than an employee.
This method creates a very smooth transition out for the current owner. The new owners are familiar with the business as well as the guests, this reduces overall risk to everyone involved.
Furthermore, the internal process and transfer of responsibilities remain confidential and are often handled quickly. This is an especially important benefit to fishing & hunting lodge, camp & resort owners as their guests often become quite loyal to the current owner, and many businesses lose long time guests after a sale because they see it as an opportunity to try somewhere new. With a management buyout this largely avoided with such a smooth, gradual transition out for the current owner.
Employee Stock Ownership Plan
Keeping a family business within the same family from generation to generation is not always a possibility. BUT an Employee Stock Ownership Plan (ESOP) is a way to keep control of a family-owned business within a different type of family—the employees.
An ESOP provides many advantages. An ESOP is a viable option for family owned fishing & hunting lodges, camps & resorts that lack outside buyers or next-generation family members to take over ownership. An ESOP aligns the interests of owners and participating employees. This is a powerful strategy for attracting and retaining talent as well as motivating your employees to create an excellent experience for guests.
While ESOPs offer several interesting benefits to the owners and employees of family-owned and other closely held businesses, they have their limitations. ESOPs cannot be used in all business structures, and their setup and ongoing maintenance can be costly.
Before deciding whether an ESOP is right for your business, consult a tax accountant, attorney and wealth advisor on the best way to transition ownership of your business.
Plan the Sale As Early As Possible
- Owner & employees agree on a sale price. This is best assisted by a professional fishing & hunting lodge, camp or resort appraiser.
- Managers assess the portion of the shares they could purchase immediately, and then draft the shareholder agreement.
- Financial institutions are approached.
- A transition plan is developed that incorporates tax and succession planning.
- Managers buy out the sellers’ interest with financial support.
- Decision-making and ownership powers are transferred to the successors; this can take place gradually over a period of a few months or even a few years.
- Managers pay back the financial institution.
Conclusion
We’ve surveyed former fishing & hunting lodge, camp & resort business operators, and most reported that they experienced some level of regret shortly after closing the deal even when they obtained the selling price they wanted.
The primary reason for this regret was that they felt the issue of the business’ legacy was not properly addressed in their sale planning. They wished they had taken more measures to ensure that the culture and values they instilled in their business would continue after they left.
Setting up a management buyout or employee stock ownership plan can help ensure the business will move forward with people who share your vision and values.
Selling your business to the employees will require a shift to more participative management and the willingness to share financial information. However, it can give you a more flexible exit timeline, a fair selling price and the ability to leave the business’ legacy intact.
This article has been prepared by Frontier Hospitality Advisor for general information only. Frontier Hospitality Advisor makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Frontier Hospitality Advisor excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this article and excludes all liability for loss and damages arising there from.
