Business for Sale

The business: Who wouldn't hit the slopes for a business that combines majestic scenery and fabulous growth potential? This getaway package includes a ski lodge with a dining area and a rental shop. Four chairlifts provide access to trails spread across 140 acres owned by the resort and 560 acres on long-term lease from the national forest service. The property is nicely situated in Idaho near the south fork of the Snake River, just a 25-minute drive from the closest airport and two hours from top destinations like Jackson Hole, Wyo., and Yellowstone National Park. The land is wooded with pines, aspens, and junipers, and borders the Targhee National Forest. Its highest points overlook a canyon.

The resort, opened in 1958, has changed hands three times. The current owners bought it two years ago from owner-operators like themselves. They are selling it now to pursue another venture. During their tenure, they concentrated on building a loyal, local customer base for day and night skiing for beginners and intermediates. They also remodeled the 10,000-square-foot lodge to better accommodate corporate and social events.

Equipment rentals and food-and-drink sales chip in about 15% of annual revenues apiece, with lift fees providing the rest. In peak season, the owners employ 120 workers, including homemakers, college kids, and aggie types whose other job ends with the fall harvest.

The deal's biggest drawback is that the resort lacks lodging for overnight stays. Since the property is recreationally zoned, the owners say, a buyer could probably build a hotel or condominiums.

Price: $5 million. With $1.5 million down, the owners will consider financing a portion of the deal.

Outlook: This deal offers all the thrills and chills of a great run. Its growth possibilities are limited only by a buyer's financing realities. If you've got the bucks, build some sort of inn or condo development to broaden the business's reach. Start aggressively marketing the resort as a conference setting or a vacation destination. Potential buyers who are more constrained on the capital front could consider a slower but still steady way to boost sales: market the property as a year-round haven for day-trippers who enjoy fly-fishing, hiking, and mountain biking. In that case, most of your revenue growth will come from increased food-and- drink sales.

Price rationale: Let's just say this deal doesn't deserve to medal. Ski resorts (which often lease their acreage, the way this business does) typically sell for 40% to 45% of annual sales; companies in the higher range are those that have longer-term leases. That would suggest a sales price for this business of $415,000 to $467,000. Local real estate experts estimate the value of the 140 acres included in the deal to be between $7,000 and $10,000 an acre. That's a total of $980,000 to $1,400,000. The sum suggests a sales price between $1,395,000 and $1,867,000. For a resort lacking overnight accommodations, the mountain of cash the owners are asking for is hard to justify.

Pros: Fantasy businesses seldom come with this much undeveloped growth potential.

Cons: The price tag induces altitude sickness, and don't forget that there are plenty of resorts in the Rockies chasing the same dollars.

Idaho Ski Resort Financial Summary
Gross
Revenues*
EBITDA** Owners'
Compensation
1999 $770,821 $128,140 $50,000
2000 $1,012,952 $163,888 $50,000
2001 $1,038,288 $173,291 $50,000

*In keeping with ski-industry practices, the financial figures reflect the full ski season rather than the calendar year. For instance, the 1999 numbers indicate the 1999-2000 ski-season results, and the 2000 numbers reflect the 2000-2001 season. **Earnings before interest, taxes, depreciation, and amortization.

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 Jeff Krantz at 208-523-1026 or Dave Stoddard at 208-523-0862.


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