Selling Your Fishing & Hunting Lodge, Camp or Resort Business to a Competitor
For Fishing & Hunting Lodges, Camps & Resorts, their direct competitors are often quite clear. If you’re selling your business you may want to consider approaching your competitors to see if they have any interest in expanding their operation by buying yours.
Competitors can make great buyers for businesses. These potential buyers are easy to find and could experience an immediate benefit from buying your lodge, camp or resort. On the other hand, your competitors may want to simply look “under the hood” of your business to gain market intelligence. As such, protecting yourself is key when negotiating terms.
Identifying Competitors
There are three main types of Fishing & Hunting Lodge, Camp & Resort Competitors: direct competitors; indirect competitors; and near competitors.
- Direct competitors are those that you compete head to head with. They may offer a similar experience, similar quality lodging, similar location, similar target market.
- Indirect competitors for lodges, camps & resorts compete with you on some, but not all of your lodging business’ offerings.
- A proximate competitor for a lodge, camp or resort is one who could be a direct competitor but in a completely different territory (province or state).
Fishing & Hunting Lodge, Camp & Resort Competitors will buy a competing business for many reasons such as:
- To increase their market share
- To gain access to more and/or better equipment
- To improve/increase their location offerings
- For larger or more modern facilities
- To acquire better sources of supply
- For a better return on investment (ROI)
- To acquire a competitor’s knowledge
- cross sale opportunities
Benefits of Selling to a Competitor
For unique businesses like fishing & hunting lodges, camps & resorts it can take years to find the right buyer, let alone a buyer who can be successful taking over your business and is willing to meet your asking price.
You can potentially speed up the standard time frame to sell your business by making a list of all of your competitors and determine which ones are capable or and may benefit from purchasing your business.
Competitors are already experienced in your industry which means they have verifiable finances, significant assets and a reputation in the community. These three things make it significantly easier for them to obtain financing. This means you don’t have to worry about providing seller financing to someone who may not follow through on the deal in the long run.
By selling to a competitor, you are selling to someone who can run your business properly because they already have a similar one that they are running. They’ve already learned the hard lessons and know what it takes to run a successful lodging business. This is important to many owners because they’ll know that they’re leaving their guests in capable hands that will continue to deliver a quality experience.
Selling your business doesn’t necessarily mean you have to sell the whole business. Often the only goal is to exchange business assets for money in the bank. If this is the only goal, is there a way to only sell a part of the business and reduce your role to doing only those aspect that’s you enjoy and are physically capable of?
Sometimes a fishing & hunting lodge, camp or resort business owner may just want to sell inventory, or assets to a competitor in order to liquidate it quickly. Competitors will often jump at the chance of doing these kinds of deals because it is cheaper for them and it benefits their businesses tremendously. They don’t have to go through the hassle of purchasing the entire business first in order to expand their enterprise.
The Risks
As beneficial as selling your business to a competitor may be, there are risks as well. One of the biggest risks that you’ll discover as a seller is when buyers make information requests.
Competitors may want to know information pertaining to marketing programs, supply chains, or even the names of guests. This is highly sensitive information for you as a business owner that you shouldn’t be giving out to anyone, especially a competitor. There could be a situation where a competitor is just pretending to be interested in purchasing your business for the sake of getting their hands on your company’s sensitive information.
Fishing & Hunting Lodge, Camp and Resort Owners are wise to be familiar with these risks, and mitigate them as much as possible. These risks must be weighed against the knowledge that oftentimes a competitor will pay the highest amount for your business.
That said, there are several key considerations for owners when speaking to a competitor about purchasing the business:
- Execute a Non-Disclosure Agreement (NDA) – NDA’s and Confidentiality Agreements protect the company from having its guest list poached, employees hired away, marketing programs replicated, and suppliers stolen.
- Dual information sharing – While your competitor isn’t for sale, it is important for them to share important information with you for multiple reasons. First, viewing their financials can confirm they have the financial ability to undertake the acquisition. Second, understanding their operations can validate that the operational synergies they’re hoping to achieve are realistic. Finally, through sharing material both directions, it ensures that the other company has “skin in the game” to uphold and adhere to the NDA.
- Provide requested information gradually – There is no need to open up the vault the moment an NDA is executed. Owners know better than anyone what they’re comfortable sharing at each stage of the process. Release the least sensitive information first to continue confirming interest and the buyer’s desire to acquire.
- Redact sensitive material – Vendor and guest lists, pricing sheets, and other competitively sensitive material can be sent over with key items redacted.
- Implement a breakup clause – As you get to the point where you are close to signing a Letter of Intent (LOI), consider including a binding breakup clause with the LOI that results in financial consequences to the buyer if they walk away from the deal without cause. This ensures they’re not entering into the no-shop diligence phase with the intention of just walking away after they’ve gathered intelligence.
Closing Remarks
Fishing & Hunting Lodge, Camp & Resort owners should not make the mistake of excluding competitors from the list of potential buyers of their business. Selling to a competitor is a very strong option and despite the competitive risks involved, if the sale process is managed well it can lead to the highest sale price.
Sensitive information can be shared gradually and in the appropriate format such that the prospective buyer can complete the necessary due diligence and close on the acquisition while minimizing the competitive risks to the seller.
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.
