Last month we wrote our column about how we decided to sell our campground, but this month we want to explore some of the practical aspects of the sale. If you’re thinking about listing your park or are curious about what the process involves, hopefully some of our thoughts will help.
We previously wrote about selling our motel, the Outside Inn, which had been in the family for multiple decades. We wanted to use our lessons from the experience to inform our selling of Inn Town Campground.
What did we want to do differently? Here are some of the things we learned from selling the motel: hiring professionals who specialize in the industry, understanding how much the business is worth (and having realistic expectations about that value), and finally paying attention to managing your message in the community and with staff.
Working with professionals who understand our industry is critical. They know the nuances of campgrounds and RV parks and can provide valuable guidance when contemplating a sale. We worked with Tim Dougan, from Campground Brokers of America, who we met at the Campground Owners Expo in Branson, Mo.
Tim was helpful in giving us a base level of understanding of what the selling process looks like, how he does his job and what he expects from clients throughout the journey. Tim and his team have a depth of industry knowledge that is impressive and helped us understand where our park sat in the marketplace.
However, like any relationship, choosing your agent is personal. We recommend you spend the energy talking with several people to see who you like. It takes time to find out if you’re a good match; different people have different styles and it’s important that you find someone you want to work with. We also worked with Christine Taylor at Goldberg Segalla, who was able to guide us through the more complex legal elements of a sale. Having not used a lawyer for our motel sale, it was nice to have the experience, surety and advocacy that Christine brought to the table.
Again, find the right fit for your needs because these two relationships are critical to a successful selling process.
With a good sales team lined up, the next consideration was coming up with a price point. A broker, or even an appraiser, can give you guidance on both fundamentals of valuation and market conditions to help set a price. Start looking at your numbers early and critically. Prospective buyers will want clean, verifiable financials that span several years. If yours are underwhelming, start tidying them up now so they’re ready by the time you sell. With good numbers underpinning your park, you can start to think about value.
Basic cap rates and/or multiples are used to broadly value parks, but there are a lot of nuances. We all think our parks are fantastic and worth a premium, but ask your agent where you sit on the spectrum, and they will tell you how remarkable your park is compared to others and if it can command a premium price. The age-old adage applies here: your park is worth what someone is willing to buy it for, so be realistic and understand your park’s value. In our case, we knew from the beginning that our sales and profitability were going to be key to getting a good valuation, so we managed them closely for years.
We also knew that we had good systems in place for our bookkeeping and back-end documentation, so when buyers materialized, we could provide evidence to support our reporting. Be prepared to organize, justify, clarify, and communicate every aspect of your business. We joked that it felt like everything was out in the open, which can be intimidating. You’ll get questions like “Why did you have a drop in occupancy in this month?” “What radius of distance do your customers come from?” “What percentage of your camp store income is beer & wine?”
It can all feel intrusive, but it’s part of the process, and don’t take it personally (like we often did).
Park inspections will also be part of due diligence. This process, much like verifying your financials, is designed to build confidence for the buyers that the asset is worth what they are planning to spend. You will need to allocate time for inspections, and potentially some explanations for staff when they occur.
One of the top questions prospective buyers will ask is: Are there expansion opportunities, and have you researched the process? We had one potential buyer ask us, “If you have $250,000, what would you spend it on?” These are good questions, so have an answer ready.
Finally, understand that the selling process is invasive, difficult, and stressful. Most of those emotions will stew around in private until a deal is ready to close. That’s because there are so many hurdles to overcome, and deals can fall through.
When we sold our motel, a prospective buyer violated a confidentiality agreement and approached our staff about the sale before we had a chance to discuss it with our employees. That buyer didn’t close the deal, and our staff mutinied for the rest of the process. Having experienced that scenario, we had to be extremely careful about how and when we shared the process with our friends, family, staff, and community.
We didn’t want to unnecessarily stress out our staff throughout a process that could take a while. Also, we wanted to be 100% invested emotionally and strategically in our business until the finish line. Having a long, public selling process would have distracted our staff and us from the job at hand — running a top-notch campground. Of course, that meant people were shocked when we announced the sale because we hadn’t talked about the process prior.
If everything has gone well and you decide to sell, hopefully you’ll get a good, fair price for your park and will work with competent people who can make the process as smooth as possible. We think it’s important, if you’re thinking of selling your business, to step back and think about your role in the business and what it will be like when you sell.
Things will be different: staff will leave, operations will change, your brand will evolve, and your part of the story will fade. We knew our process to sell would be a journey, but we’re extremely grateful to have had sage wisdom from our team and good buyers to work with. As we head into the next chapter, letting go of our role in Inn Town Campground has been hard, but it’s giving us the freedom to see new possibilities and to scratch that creative itch.
Erin & Dan Thiem are veteran campground and outdoor hospitality owners and operators. Erin currently consults in social media marketing and outreach, while Dan is an operations specialist and advisor to seasonal, operation-intensive businesses. They are the founders and former owners of Inn Town Campground, a three-time winner of USA Today’s 10 Best RV Campgrounds.
