How to Sell a Boat Dealership

Sell a Boat Dealership

Boat dealerships have skyrocketed in recent years as more Americans now work from home and enjoy outdoor activities more regularly. The trend is expected to continue moving forward, which leads to excellent valuations for boat dealership owners who are planning their exit strategy. This review discusses how to value and sell a boat dealership. 

About Boat Dealerships in The United States

The oat dealership industry has grown substantially over the past five years, and dealerships are expected to sustain growth for the foreseeable future. Boat dealerships primarily retail new and used boats in combination with activities, such as repair services and selling replacement parts and accessories. Many boat dealerships also retail new and used outboard motors, boat trailers, marine supplies, parts, and accessories (Business Reference Guide). The most recent sales data is as follows: 

  • There are approximately 105,000 boat dealerships in the U.S. 
  • There was a 6.2% annual growth for boat dealerships from 2018 to 2023
  • Boat dealerships generate $29.6 billion in annual revenue
  • The annual profit for boat dealerships is $1.7 billion
  • Experts predict a sizable increase in annual growth (2.3%) from 2023 to 2028

How to Value a Boat Dealership

We recommend a market approach to best determine how much you are likely to receive for your boat dealership on the market. A market approach uses your seller’s discretionary earnings (SDE) and rule of thumb data (also called industry multiples) to determine a base value. Adjustments may also apply based on information such as your growth potential, unique industry advantage, reputation, location, and reason for selling. Here is the industry rule of thumb data: 

  • Boat dealerships sold between 2.47 and 4.61  times the Seller’s Discretionary Earnings (SDE)
  • Boat dealerships sold between 3.23 and 5.02 times the Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
  • Boat dealerships sold between 0.37 and 0.66 times the annual net sales

You should also check: HOW TO SELL A MACHINE SHOP

What Steps Are Involved in The Sales Process?

The sales process has many complex steps. It is strongly recommended that you work with a professional broker to ensure the process goes as smoothly as possible. The most notable steps in the sales process for boat dealerships are: 

  1. Receive a market-based valuation
  2. Prepare for the sale
  3. Market your boat dealership
  4. Receive a signed letter of intent (LOI)
  5. Allow the buyer a chance for due diligence
  6. Sign the purchase agreement
  7. Ownership transfer and life transition

 

Below is more detail about each step of the sales process. However, your experience may vary based on your specific needs and exit strategy goals. 

Step 1: Receive a Market-Based Valuation

It is important to receive a professional business valuation before you begin the sales process. As discussed, we strongly recommend a market approach to determine how much value your boat dealership is likely to have on the open market. This is different than other types of valuations, such as asset-based and income-based, as it focuses on sales data and overall market conditions within your industry. 

Step 2: Prepare for The Sale

Your broker can work with you to determine the best time to bring your boat dealership to the market (see below). Ideally, you want to sell when market conditions are the most favorable. Until then, you can take measures to make the sale smoother, such as preparing your financial and legal documents. Notably, these documents include:

  • Tax returns (3+ years)
  • Balance sheets
  • Profit and loss (P&L) statements
  • Cash flow statements
  • List of your boats (and their value)
  • Additional inventory lists 
  • Insurance policy
  • Copy of your lease
  • List of boat salesmen (and other employees)

Step 3: Market Your Boat Dealership

Bringing your boat dealership to the market and finding a buyer occurs confidentially via private channels, rather than publicly listing your boat dealership. This helps avoid public relations concerns, disgruntled employees, and reduced profitability for your dealership as the sale is not made public until you have a buyer secured and ready to sign the purchase agreement. Finding a buyer via private channels may involve leveraging private contacts your broker has established over the years, private databases and networks, and other private methods brokers generally use.

Step 4: Receive a Signed Letter of Intent (LOI)

The final step for the marketing stage is getting a buyer who meets your exit strategy goals to sign a letter of intent acknowledging their intention to purchase your boat dealership. Before this occurs, you may need to negotiate with all prospective buyers to ensure you get the best deal possible. Of course, your broker is there to assist you with negotiations. The buyer may also have certain contingencies they feel are important to protect themself as well. Discussing and planning contingencies is also a key part of this final marketing step. 

Step 5: Allow The Buyer a Chance for Due Diligence

This step involves a review of your financial and legal documents (which is why it is important to prepare them ahead of time). Additionally, you may need to answer a series of questions the buyer has so that they can learn more about your boat dealership before they officially follow through with the purchase agreement. The due diligence process should follow a structure that ensures the process is thorough yet does not drag on for months at a time. 

Step 6: Sign The Purchase Agreement

After due diligence, you can schedule a time along with the buyer to close the sale. At the closing table, your attorney (and the buyer’s attorney) may want to receive the purchase agreement a final time. Afterward, you and the buyer can sign the deal, and they can send the payment to complete the purchase process. 

Step 7: Ownership Transfer and Life Transition

You still need to notify employees and customers that there is a change in ownership. This often takes place during the closing meeting. You also must update all business information, including your business license, insurance policy, lease, and more. This process may extend beyond the closing meeting. Once ownership is fully transferred, you can continue on to the next journey in your life, whether it is retirement or another professional venture.

Speak With a Professional Broker at Sigma Mergers and Acquisitions

Here at Sigma Mergers and Acquisitions, we help business owners plan and execute their exit strategy, ensuring they receive maximum value for their company and help them attain their other goals for the sale. To learn more about the sales process and how we can assist, schedule a consultation today. We offer free, no-obligation consultations to help you determine your boat dealership’s value before your sale.

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Scot Cockroft Business Broker
Hi, I’m Scot Cockroft.

When I founded Sigma Mergers and Acquisitions back in 2003, I had sold my business the year prior.

Now, that can sound good, but let me tell you, back in 2003, it was not easy to sell a business. Not that I’m saying in modern day times it’s easy to sell a business, but back then I interviewed broker after broker after broker, and no one was interested in actually seeing the value that my business brought to the table.

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Sigma is a the leading business broker in with Corporate offices in Dallas/Fort Worth with roots from 1984. Over 600 businesses sold in Dallas, Fort Worth, Texas, Oklahoma and across the South. Sigma provides full business brokerage services with NO upfront fees. We provide Market approach business valuations for business sales. Sigma is passionate about helping business owners achieve their goal of financial security. Contact us today for a free no obligation business valuation. We are here to help you achieve your goals.

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