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BUYING A SMALL BUSINESS

Sails and Services

Business for sale: A Cape Cod marina for $9.15 million.
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When he bought this marina about a decade ago for $1.5 million, the owner says, it was a "sleepy little boatyard" for commercial fishermen. He and his wife have transformed the business by catering to novice recreational boaters who "don't want to lift a finger" to maintain their high-end powerboats, which cost as much as $450,000. The marina's 92 slips are booked solid and there's a three- to five-year waiting list of prospective customers. The marina also provides rack storage for 20 boats.

The business is multifaceted. New and used boat sales ($700,000) and services ($972,000) are the top sources of revenue, followed by slip rentals and rack storage ($580,000). Sales of items such as life jackets and fishing equipment augment the bottom line, as does a small charter boat service.

To ensure year-round revenue--the goal of all New England marina owners--the business loads up on service work in the winter and offers favorable annual rates on slips and storage. The staff swells to about 22 in the summer, from 10 in the off-season, and is trained to provide exceptional customer service. "Except for commercial fishermen, no one really needs a boat," the owner says. "So it has to be fun for people."

The Asking Price: $9.15 million. The main assets are two parcels of land: one waterfront acre that houses offices, boat sales, the slips, and a retail store; and another two acres inland for the storage and service facility. The deal also includes three charter boats, three trucks, and boat-hauling, dredging, and repair equipment.

Price Rationale: With pricey real estate, seasonality, and multiple streams of revenue, marinas can be tricky to value. That said, they often sell for a multiple of 10 times EBITDA, according to Tom West, author of the 2007 Business Reference Guide. Here, the asking price of $9.15 million is 9.4 times EBITDA.

The Pros: Building a marina or even expanding an existing facility is difficult on the East Coast, enhancing this business's value. And rather than maintaining a large inventory of new boats, the owner enjoys an unusual consignment deal with another dealer, which reduces inventory and insurance costs.

The Cons: In the summer, this is a 24-hours-a-day, seven-days-a-week business. And the marina's upscale clientele is demanding, so a new owner would have to meet high expectations in a tough market. There's no shortage of boat dealers on Cape Cod and at least three full-service marinas are nearby.

The Bottom Line: Industrywide, boat sales have been down this year. Yet demand for boat slips has grown as many marinas have been sold and closed to make way for condo developments. As long as slip and storage revenue (now $48,000 per month) covers a buyer's debt service, the deal makes sense.

Company
Financials
2004 2005 2006
Gross
Revenue
$2.2 million $2.4 million $2.7 million
EBITDA* $773,397 $941,027 $973,052
No. of
annual
service
contracts
252 291 315

*Earnings before interest, taxes, depreciation, and amortization.

Inc. has no stake in the sale of the business featured. The magazine does not certify the accuracy of financial or other information provided by the seller. Inquiries should be directed to Marc Anton of Richard A. Mathurin and Associates (800-909-7740 or marc@marinasales.com).

Inc. also publishes paid business listings in the back of the print version of the magazine.

Last updated: Aug 1, 2007




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