Financial summary and brief description of Wyoming hot-spring water park.
The Business A (sort of) combination health spa and water park set on 2.2 acres of leased land atop what is said to be "The World's Largest Hot Spring," this business includes two large mineral pools (one indoor, one outdoor), two hot tubs, three Jacuzzis, a natural steam cave, and three water slides (the largest measures 500 feet long). Revenues come mostly from admissions (55%); gift-shop sales, including swimwear and sundries (22%); and food and beverages (21%). The owner wants to retire.
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Recast earnings before interest, taxes, depreciation, and owner compensation
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Price $1,135,000 (No seller financing)
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Outlook Water parks have enjoyed pretty solid attendance recently, but it's a very weather-dependent business. Since this park uses hot spring water, however, sometimes business is stellar even on inclement days. The park sees mostly locals in the winter (there are 1,000 season-ticket holders in a county of only 4,800 people) but enjoys steady tourist traffic in the summer. Although the admission rates of $6 for adults and $2 for children are well below the industry average, insiders say the sales look pretty good for an operation this size.
Price Rationale The owner set the price by tallying the $1.1 million in upkeep and improvements he's put into the park in the past 18 years (which has depreciated to $750,000 in current hard assets). So it appears he's looking to make his money back. But sale prices for these concerns are rarely based on assets. (Water slides have little value on the open market.) Most insiders estimate the price should be somewhere from four to five times earnings, or about half the asking price.
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Pros There's the spectacular countryside. The strong sales. And then there are the lifestyle benefits; while many debate the medicinal properties of mineral baths, few can deny their sybaritic effects.
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Cons The amount of money the owner put into the business isn't really relevant to its value. Look at it this way: wouldn't you love to get back what you've put into your car? By all accounts, this business is substantially overpriced -- and exactly how many baths, mineral or otherwise, can a person take? -- Christopher Caggiano
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Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Tarantino Co., Loveland, Colo., 800-489-8601. n