Marina Dock Age, April/May 2001

Determining a Marina’s Value in the Real World
by Dennis P. Kissman

The marine industry as a whole has some real soul-searching to do. The engine manufacturing component of the industry is just getting over the OMC bankruptcy shock. Now we hear of the changes at the top of Marinas International, leaving its future uncertain as to whether Goldman Sachs, its principle financier, is planning to stay in the marina business or dump their portfolio of marinas on the market at fire-sale prices. Top that off with the negative talk about the economy, and everyone is beginning to worry about the future.

Marinas are one of the last remaining cottage industries in this country and reacts to news of this kind on a personal level. As a result, the Marinas International news will have a greater negative impact on the marina component of the industry than OMC had on the engine-manufacturing component. And all this comes on the heels of Bank of America (formerly NationsCredit, the largest lender on marinas), pulling out of the marina lending business and leaving it up to local branches to make individual lending decisions.

My concern is that this wave of disturbing news may cause some marina owner/operators to panic and may discourage other potential buyers of marinas. My word of advice is, don’t panic, but reassess your position before you make any changes in your business plan. There are still opportunities for owners to sell or refinance and for buyers to buy. But I think everyone may have to be a little more creative to make it happen. Be wary of the Carpet Bagger—this industry has seen more than its fair share over the years—who comes knocking on your door to tell you about this great deal you can’t live without. Most likely you can’t live with it, either!  

Always remember that your audience is made up of customers who will give you money. For a transaction to culminate there has to be a level of confidence between all parties involved or the check will never be written.

With this in mind, let’s look at how we can achieve this goal. Your ability (or that of a potential buyer) to get a loan will be based strictly on the past performance of your marina. If you have followed some of my articles over the years, I have explained how to prepare for this.  

Let’s assume you did not prepare, so the question is, what can I do now? All is not lost, but this is not the time to get holier than thou. Obviously, the end result is not going to be as good as it would have been if you had prepared, but let’s work with what we have and make the best of the situation at hand.

At this point, the one advantage you have over everyone else is that you know your operation better than anyone else. The first thing to do is honestly assess your operation. Separate reality from wishful thinking, and be able to present the facts, not fantasy. Wishful thinking is the “could have done it, but didn’t” syndrome. Fantasy is creating financial and statistical information that has no relation to what actually happened.

Suppose you need a loan to expand your operation. You might think this is wishful thinking because you would be creating something new, and the only information you can present are financial projections as to what this addition will do for the operation. This may be true, but it is not your projections that will get a lender to write the check. It is how well you have performed in the past that will reassure the lender that you will be able to meet your projections. In any scenario where someone is going to write you a check, past performance will determine the outcome. Continue »