By: Dan Austin, Austin Adventures
Last November I was asked by the good folks at the American Outdoor Association to leave the bitter cold of Montana and speak to members at their annual conference in sunny Florida. Wasn’t a hard sell! I was asked to share my experiences with Mergers and Acquisitions in the adventure travel space. Again, wasn’t a hard sell! I have personally worked through over a dozen transactions and helped countless others do the same. To say I thoroughly enjoy the process is an understatement.
When I was asked to write a follow-up article, I reflected back to the conversations I had before and after my talk in Florida. What became quite clear is many businesses, if not most, do not know where to start. The common theme is simply one might be an amazing tour operator, has been successful in his or her niche, but now thoughts turn to retiring or going a different direction. Let’s face it, this industry is not all vacations in some exotic land. I can share from personal experience it takes its toll. (That said I would do nothing different than spending the last 30 years enjoying the benefits and facing the challenges.)
So where do we start? (Note this is directed at selling, not buying; I will save that for another day). I am confident there are many ways to get started. The following is just what has worked well for me.
Photo provided by Austin Adventures: Peru Trekking
Where to start
1) Continue to manage your business to the best of your ability and push forward as if there is nothing in the wind. This really is key as buyers want to secure business on a forward trajectory. It’s great to show where you have been but just as important to illustrate how well things are going and where you will be in 6-12-18 months. (Side note: deals can take 6-12-18 months with no guarantees you will get a deal done that meets your goals).
2) Get your financial house in order. Seriously, it really is amazing how many of us don’t really have the sort of record keeping and illustrations needed (trust me, I have been there). If you have competent in-house financial accounting and support, great. This will likely have to be the first person you bring into your little inner circle of trust. Again, don’t wait to be asked, this can all be beneficial before, during and after a sale, so jump in sooner rather than later. At a minimum you will want at least 3 years of complete financials. This includes a DETAILED balance sheet, not just gross revenue and profits. If you need outside help, get it. Again, a great investment no matter which way this all goes. With 2020 being the infamous COVID year, I suggest using records from 2019, 2020, 2021 and 2022. Everyone understands 2020 was what it was. 2022 over 2019 is a good sign to a potential buyer. Have a current Year to Date (YTD) at your fingertips. Buyers get nervous if you have to “dig” for financial information. Don’t cook your books. It’s all going to come out at some point. It’s okay to articulate “owner compensation” or “one off’s”.
3) Know and illustrate “data”. Here are a few key elements that pay dividends:
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Sales Data. Illustrate your sales by a minimum of monthly basis. (This will help illustrate cash flow potential). I love sales reports. I can honestly share week over week, year over year going back some 20 years. (You really should know this anyways). Keen eyes will spot trends.
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Database. Know your demographics. Enquiring minds will want to know. Illustrate annual number of repeat guests (how often and total number of trips). Provide an aged list of “prospects” in your database. How active? How old? Known fields? Email lists are a big asset.
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Past, current and future marketing plan (including spend). What has worked, what hasn’t. What sort of ROI on each effort. The more insights the better. Include screenshots of brand identity (e.g., catalogs, mailers, newsletters etc.)
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Website Data. Again, historic and current. Drill down to number of overall visitors (unique?), time on site, average page views, actions taken (itinerary downloads, all calls to action, etc.)
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Media attention. I have tracked our “impressions” for years. Share sample press releases and major pick-ups.
4) Know your product. Break down by top selling products, what sells when, number of departures, and fill and run rates. Gross profit by trip is a must.
5) Accurate and detailed (aged) inventory and hard assets. Bikes, vans, rafts, etc. Think through everything you would need to go buy if you wanted to start from scratch. Don’t forget office equipment, computers, servers, phones, etc. Be realistic on the value.
6) Staffing organization chart, resumes and pay scales. Don’t be shy about talking up your team. Note key players. Who is committed, who won’t stay in a transition, and roles and responsibilities for each. Location of employees.
7) Speaking of location, any facilities and copies of leases.
8) Sales and Marketing Plan. This is by far my favorite tool. If you can comfortably illustrate what you have done, what works, channels (travel agents, alumni, prospects, etc.), this is where you can best tell your story.
9) An Executive Summary! This is where you get to toot your own horn. It’s also a good chance to share where you see yourself fitting in. Don’t be shy, position yourself as the expert in your field. Touch on the industry, your position in it and why someone would be crazy not to buy you.
Okay, now don’t panic. Most do not have all of the above ready to share when they start the process. It is quite appropriate to share a “boiled down” version of the above to gauge interest. If there is interest, next step is an NDA (Non-Disclosure Agreement) and establishing a data room to accumulate all of the above and more. The more you can share upfront, the better you will look in the eyes of a buyer.
Again, this will not only position you for the best possible offer, but it is 100% key for running your business regardless of where you take it.
Note From the Author
Message from Dan Austin, Founder of Austin Adventures: Thinking about selling? Maybe acquiring a competitor? I am happy to have a no obligation conversation and talk through where to start. Email me at dan@danaustinllc.com or call 1-406-671-6067.