Avoid the pitfalls, spot the trends

Selling a marina business is complex and often involves many unknowns, particularly for a first-time seller who may be unaware of the common pitfalls that can disrupt a sale, says Jon Patrick, director – head of leisure and development at UK-based Christie & Co. He talks to Marina World about these common problems, market trends, and the sales process.

Issues that delay the process are often uncovered as a result of due diligence undertaken by the buyer, banks and surveyors, and it is in any seller’s best interests to be well prepared in advance. Patrick cites the following as key things to watch for:
• Dredging – if dredging is relevant to the site, the seller must be able to demonstrate a regular programme and its associated costs.
• Bathymetric surveys (mapping the depths and shapes of underwater terrain) – experienced marina buyers will expect to see these and, in general, it is better for owners to have their own survey and thus be on the front foot in terms of questions they may receive.
• Pontoons and walkways – are they in good condition and Health, Safety and Security (HSS) compliant?
• Electricity and hook-up supplies – age, condition and supply details.
• Harbour walls and lock gates – need to be in a good state of repair. Documentary evidence of regular checks and maintenance is helpful.
• Other surveys – subject to cost, it can be worthwhile to invest in structural pier and land contamination surveys and take any necessary remedial action.
• Third party leases – concessions are a valuable part of many marina operations and need to be accurate and up to date. Any outstanding rent reviews need to be addressed.
• Sea bed leases – all documentation should be in place with the relevant crown estate or local authority.
• Trading information – have at least three years’ certified profit and loss accounts available, together with management accounts.
• Mooring and berthing data – ensure all fee information is up to date and in a format that shows the performance of the business over a three-year period. Information regarding charges per metre, seasonal variations and available space is key.
• Staff – create an anonymised schedule of full and part-time staff including roles, start dates, number of hours and rate of pay.
What should you avoid doing? “The key to preparing any business for sale is ensure that you don’t stop running it as though you’re going to be doing so for the next few years,” Patrick emphasises. “In other words, don’t stop any required investment. If you need to make staff hires do so, and ensure that all and any H&S issues are addressed. It should be business as usual.”
Q: What are the trends in the UK for buying/selling marinas?
A: The continuing trend in terms of the transactional market for marinas is that only a very small percentage of marinas might change hands in any one year. This appears to be a similar trend elsewhere, with the US reporting 78 transactions in 2023 in a significantly larger market (10,445 marinas) and a 16-year average of only 65 marina sales per annum.
Compared to previous years, we have seen greater activity in the sector. There are a variety of reasons potentially driving this. We have things like retirement (marinas often stay in the same hands/family for many years) and succession planning can be a challenge, particularly where the next generation may have moved away for education/work purposes.
Business and partnership splits can also influence a decision to sell being made, but we’ve also seen an increase in financial distress as a result of the significant increase in interest rates and associated costs of capital that owners with higher levels of gearing have had to accommodate.
The opportunities we’ve handled have I believe created further market awareness, not just from within the industry, but also from investors. We’ve had a number of approaches from the private equity community keen to understand the industry and what it may offer from a scale and development perspective.
Q: Are buyers more likely to be groups or private individuals?
A: In terms of what we’ve experienced from the processes we’ve run, the potential buyers are very varied. Not surprisingly, when compared to the other operational real estate sectors we specialise in, the distance potential buyers travel to look at marinas is far greater.
The closest sector in terms of business model we see to the marina market is the holiday and caravan park market – think pitch fees v berthing fees and caravan sales v boat sales etc. As a result, some transactions have seen 25-30% of viewings come from caravan/holiday park owners and this is a trend we see continuing.
I would say that a typical sale can attract interest from individual owner/operators, group operators, high net worth individuals and investors with a keen interest in boating, along with other leisure business owners looking at acquiring opportunities that could be bolted on to their existing operation, particularly where marinas may be operated under management.
Q: Is there interest from overseas?
A: Yes. We had interest in Port Dinorwic from corporate operators in France and Greece, whilst one of our early calls on Broom Boats was from Australia. With the assistance of our marketing team, we do have the benefit of both UK and international outreach – very different to when I started out advising business owners!
Q: How realistic are sellers when it comes to asking price? Is there a guideline calculation that potential sellers can use?
A: There will always be industry standard methods that can be utilised to help inform the appropriate price or value of a business but ultimately the market will decide what any business is worth. We would recommend against placing unrealistic expectations on price as this is invariably an impediment to generating interest and by definition, market competition. This is simply solid sales and marketing advice based on thousands of transactions we oversee, whether for individual or portfolio deals.
Q: How long does the sale process generally take?
A: Always one of the questions we get asked for certain and never one to which we can provide a definitive answer. It also depends on whether a process is being conducted on an open market or confidential basis. Open marketing has a more direct route to potential buyers so tends to be slightly quicker, plus it tends to deliver around 25-30% more viewings and more bids, too. That’s a big generalisation, of course, but over the many transactions we conduct it’s a very good overview.
In terms of timescales, we would expect to have a good idea of the direction of travel following launching a business to market in the first six to ten weeks.
Over the last 18 months, the average time taken from agreeing a sale and instructing solicitors has been around six months so it’s fair to say that a typical process is around nine months. 
Q: Aside from ensuring that all is in order, what extras can a seller add, if possible, to raise the value or make a sale more appealing?
A: The key in almost all situations is to ensure you have good quality and up to date financial trading information going back over at least three years, but ideally pre-pandemic so that 2019 is shown as a “normal” year. Showing the best level of net profit and/or being able to demonstrate where and why certain costs in the accounts are non-recurring and could justifiably be added back to the bottom line underpin value.
In addition, there should ideally be definable opportunities for an incoming owner to be able to add value. These could be by improving existing efficiencies or increasing occupancy for example and thereby increasing profitability.
Opportunities that require additional financial investment are also key so things like opportunities to add drystack facilities, holiday/residential accommodation, additional service lines such as boat brokerage or amenities such as a club house/café/restaurant are more long term, but provide a helpful addition to the marketing of a business.