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STRATEGY

Business for Sale: California Dining-Yacht Service

If wining and dining on a beautiful boat is your idea of living, consider this California-based dining-cruise business.
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The Business: If you've always fantasized about spending your life wining and dining on a boat in some gorgeous locale, consider this: a 10-year-old dining-cruise business anchored at a picturesque Orange County, Calif., marina that's closed to commercial maritime traffic. With a fleet of three yachts that can accommodate groups of 25 to 350 passengers (at prices from $50 to $100 a person), this company handles corporate as well as private events (mainly weddings). It's not a low-cost operation: leased dock space costs about $10,000 a month, and other expenses include a per-passenger tax from the local harbor commission that runs from 1% to 2% of sales. But thanks to a team of 12 full-timers (including three captains, a bar manager, an executive chef, and four sales representatives), this business should continue to cruise along beautifully after its three owners -- who are ready to retire -- are no longer at the helm.

Price: $8.4 million. With $2.5 million down, owner financing may be available.

Outlook: It should be clear sailing ahead for this company, in part because the current owners wisely decided to distinguish themselves from their local competition -- which specializes in tourist cruises and private parties -- by pursuing the large and lucrative corporate-events market. A new owner could easily rev up the growth engines by adding to the company's list of blue-chip corporate customers, which now account for about 30% of gross sales. Another possible source of new revenues: hooking up with convention planners, a thriving business in Orange County that's projected to grow by about 25% during the next few years.

Price Rationale: Don't jump overboard when you look at the price tag. Cash-flow analysis suggests that the asking price may be justified, since such businesses currently sell for three to six times "EBITDA" (a figure close to Inc.'s recast-earnings calculation). In this case, that would add up to about $3.4 million to $6.8 million. Since the sale includes some very valuable assets -- such as the yachts, which have been appraised at more than $3 million altogether, and goodwill in the form of a stellar corporate-customer list -- expect this deal to close near its asking price.

Pros: A boat lover's dream business and plenty of profits and growth potential. Who wouldn't want to sail off into this idyllic horizon?

Cons: If you're not willing to work hard enough to push sales into the seven-figure range that could most easily justify the price tag, opt for a cruise to the Caribbean instead.

Financials

Gross Revenues Recast Earnings*
1997 $1,399,088 $190,133
1998 $2,244,038 $658,530
1999 $3,111,705 $1,139,148

*Before interest, taxes, depreciation, and owners' compensation.


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 Jack R. Sanders, Spectrum Corporate Resources, at 949-588-7500.


Please e-mail your comments to editors@inc.com.

Last updated: Dec 1, 2000




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