Acquisitions Anonymous - #1 for business buying, selling and operating - Is this $20mm Marina in Florida a good deal? - Acquisitions Anonymous Episode 120

Episode Date: September 2, 2022

Want to receive this listing in your inbox? Signup for our weekly newsletter:https://landing-newsletter.acquanon.com/-----Michael Girdley (@Girdley) and Mills Snell (@thegeneralmills) talk about a deal on a full-service Marina located around the Sarasota area, Florida. We dug deep into the financials, and particulars and found some pretty fun insights about this deal. Find out if this is a good buy for you or if you should scroll past this deal.Subscribe to our channel!----- Thanks to our sponsor! MoreNow.co: We help you hire exceptional manager and director-level talent that costs 80% less than US-based staff. Tap into one of the world’s most talented labor pools - The Philippines Go to morenow.co/aa and fill out the form. Or email [e-mail]. Mention this pod for 15% of your first hire. -----Acquisitions Anonymous episode 120Show Notes:(00:00) - Introduction(00:32) - Deal & financials: A Marina in Florida(03:03) - They have a Tiki Bar!(06:20) - What are our thoughts about the margins? Is there a risk associated with the revenue sources?(09:39) - What is going on with PE-backed capital in this niche?(10:28) - Is this $2M in cash flow real? How did they get to this number?(12:07) - Where do all the cash flow and revenue come from?(15:33) -Who’s selling this? What can we infer from that?(17:02) - Our sponsor is Morenow!(18:52) -How complicated is it to run a marina?(20:05) -Who would buy this? Where is the value?(25:12) - What do we like about this?(25:33) - Are you up for Michael’s Challenge?(26:05) -Leave us a review on your favorite podcast platform!Did you like this episode? Leave us your feedback in the comments!-----Links:Subscribe to the podcast if you’d like to listen instead:https://podcasts.apple.com/us/podcast/acquisitions-anonymous/id1533153678https://open.spotify.com/show/4rbeAODKXwwEOxf905He22 Looking to become a sponsor? Write us an email at [e-mail] Follow us on Twitter @acquanon Learnings about small business acquisitions and operations.Subscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Welcome to Acquisitions Anonymous, the internet's number one podcast about buying and selling small businesses. Today, Mills and I, Michael Gurdley, talked about a cool deal in Florida, which is a full-service marina that we think is somewhere around the Sarasota area. So a lot of double-clicking on stuff in there, and we learned a lot about what was going on, and also Doug and had some pretty fun insights. So with no further ado, here is the episode of us talking about this particular marina. down in Florida. Tons of fun. And I hope you enjoy it. All right, Mills, I have two things for you. One, I got it as a banger deal to go through. You're going to appreciate this a lot. I will read it in just a second. Number two, this will be the last episode that I do without having LED lights behind me. I ordered a whole like YouTube style rainbow light system. So I hope you're ready. Hope you take your,

hope you take your meds because these episodes are going to be psychedelic as far as I'm concerned going forward. You're just going to continue to level up and I'm basically on my USB mic and my MacBook Air computer, you know, camera. And that's just, you know, more and more of what people should expect. I'm on a continual path of personal growth and this is what I bring in. Okay. So here's the deal. Here's the deal for today. I will pull it up here. It is a banger and it has to be totally excited. So the title of this, and it is from our, Mills, it is from our future sponsor, by biz sell, right? And you know how you can tell they're not a sponsor yet? It's because I'm not pronouncing their name correctly.

When they become a sponsor, I will get their name correctly. I will go through therapy and I will call them by the real name. I have so much upside with this sponsorship opportunity. So many things. So many things. All right. So here's the deal. It's on by biz cell.

I pulled it up here, the listing. The title is South Florida. resort and marina dash turnkey and profitable. And it says it's in Florida. They're asking $2 million or $20 million for it. It has a picture of a marina and a pretty empty marina actually. Cash flow is $2 million on $7 million in gross revenue. They have $2.5 million in furniture fixtures and equipment and they value the real estate at $14 million. It was established in 1982 and it's in Florida. So here's some more about it in the description. Fresh and saltwater marina with access to both the Gulf and the Atlantic. So you get two marinas and one. World famous fishing and boating resort and marina being

offered for sale or joint venture redevelopment for the first time in over 40 years, this profitable family-owned fishing resort is the only commercial marina connecting the Gulf of Mexico and the Atlantic Ocean. This resort is very well received by visitors and is often sold out during the season. It is a strong social media presence and gets tremendous positive reviews online. The potential exists to further develop the business into a world-class destination resort and entertainment complex. Existing amenities include full-service restaurant serving breakfast, lunch and dinner seven days a week, full liquor, teaky bar, asterisks, tiki bar, hotel rooms. I mean, that's the tiki bars for $20 million just by itself.

Hotel rooms, guest cottages, gift, bait, and tackle shops, RV park, fuel, service, and repairs, and much, much more. Dockage includes 80 plus wet slips, plus over a thousand feet of floating dock to accommodate yachts up to 125 foot with room for significant expansion, available for sales, an ongoing profitable business with the primary 14 or plus or minus acres of land providing plenty of room to modernize and expand as part of a much larger redevelopment when combined with available adjacent parcels of up to 400 acres to accommodate tourists, blah, blah, blah. Local authorities and the government have identified the marina and adjacent property

as their top priority and the primary interest for a development of regional impact, strategic, blah, blah, blah. And it's less than one hour of car from the two wealthiest cities in Florida, and with the two hours of a population of seven million people, puts it in a class of its own. And yeah, let's see if they have anything else here that's interesting. New owners willing to be a partner in the new thing. And then interestingly enough, they do have a link to the business website, and you click on it at seven funds.com.

I think this is somebody who's representing them. Because this is like a, yeah, it shows like portfolio companies, but this is not listed in their portfolio. Yes. I don't know how that works. They have, it looks like they have some funds and one's like a venture capital fund. The other one's a pharmaceutical fund. It's just a guy who's helping these people sell this. This Christopher Cogan guy.

Yeah, we think that's it. as the contact. Yeah, he's like the, he's like the main guy from this GP7funds.com. So this looks like, okay, so the listing one here looks like seven funds and then, and maybe it's this thing that he's talking about here. It has listed under Cogan Realty, Ciesta Point. Maybe that's the name of what this is. Maybe I could Google Ciesta Point and figure it out. So this is also, for those of you listening, kind of the fun of looking at these deals is you're trying to figure out, like, what the heck's going on and who owns this stuff? And you can try to put together the story of the whole thing.

Yeah, so here it is. Cesta Key looks like where it is. Fuel and Bate, Book Now. And I guess Cesta Key is one of the keys headed down towards Key West, or what are we looking at here? Oh, it's over by Sarasota is what we're looking at. So I have no idea. So how does that connect the Atlantic Ocean and the Gulf of Mexico? I was trying to figure that out.

description. Yeah, because they say it's it's the Atlantic Ocean, the Gulf of Mexico. So to me, and I've pulled it up on the map, the only place that actually works is if you're at the precise point where the Gulf of Mexico becomes the Atlantic Ocean, which is like Key West, right? That's where it is. Yeah, it's like the same place that you could probably just go like out into the ocean and make the switch. You could go like inland and make the switch. But that's such a weird, I don't know, that's a weird thing to hype as a part of the listing. but yeah well anyway maybe maybe the broker just has no clue those are all definitely possible things the um so the thing i think about this and i'm definitely interested in your opinion um since i've

done 98% of the talking stuff for this episode so i will shut up in a second but like from a real estate yield standpoint this is actually pretty good right like it's a 20 million dollar deal right and basically it is a from a real estate perspective it's a 10 cap it's flowing cash flowing 10% of the yield of the asking price. Like, not bad, right? You lever this up. You do 60%, 70% loan to value. And maybe you're getting 20%, 18% return on your money.

Now, you do have the hassle of you are operating a Tiki bar in Florida, which is not exactly the most painless thing to do, given the nature of customers and employees in Florida. But like, at first glance, I'm like, hey, this looks pretty good. What are I missing? I think those margins, they do seem somewhat reasonable, you know, the $2 million on $7 million for a marina like this. I would be very, very curious about, you know, the sources of their revenue. You know, they hype the tiki bar. I bet the tiki bar, you know, is from a contribution standpoint is, you know, less than 1% of revenue.

That would be a lot of, that'd be a lot of mytis or whatever. But, you know, more than likely this is just a marina business, and they've, they've taxed some ancillary revenue onto the sides of it, maybe like a restaurant. They may or may not own the restaurant, though. Like, you got to, you got to understand in this situation, what exactly are you buying. It may be that they just own a bunch of real estate and they turn around and lease, you know, a building that they own or ground lease. I mean, who knows?

But the thing that strikes me about this one is this is one of those deals that this, This owner has probably been convinced for the last 30 years is about to happen. It's imminent. This thing's going to be redeveloped. The city's on board. We just have to put together funding. It's going to be a huge destination. And for 30 years, it's never come to fruition.

So the big key to me would be getting in there and figuring out what is real versus what is pro forma about this listing. because I am a little bit skeptical about the $2 million in cash flow on it, but I would just want to know what is actual, what's historical, and what are they projecting if all this kind of other development? I mean, they're talking about 400 acre developments, those things, you know, that's just total pie in the sky. Yeah.

Well, and that's kind of where, you know, I think a situation like this, it's helpful to have been listening to kind of what's going. on in private equity and real estate and stuff like that. And, you know, buying and understanding kind of the pricing power that marinas have, you know, I tweeted about that, I guess, two or three weeks ago when I was on vacation. And did you see that one where I tweeted about the little marina that's the only marina on a lake? Yeah. Yeah. And like, it's the only marina on a lake. And I looked at it and I was like, why are these guys selling gas for the same price as the gas station? Like, this is the dumbest thing I've ever seen. Literally gas at the gas station where you had

to drive, pull your boat out of the water, drive it over there, was $4.99. And these guys were selling it for $5.29. Like, it just made no sense whatsoever. But I think, you know, this is where you can look and think, okay, well, PE has discovered and, you know, and asset managers of real estate have discovered real estate or discovered the power of these marinas, right? You have like a unique position. There's only so many places you can build them. People have to like, you know, have to choose you or something or nothing else, right, in terms of refueling. their boat or getting food or whatever. So you have tons of pricing power because your customers have a big search cost to go find like the alternatives. So you have to ask yourself like,

why is this on biz by or by biz cell? Exactly. And there has been so much consolidation here. The fact that it makes it onto this tells you that it doesn't fit in the strike zone for the professional buyers out there who do these in their sleep. Yeah. Yeah. So your thesis in glancing at this is, in the first place you would look is, is this $2 million in cash flow real? Yeah. Yeah. And I would be willing to bet that, you know, it's, it's probably either heavily, heavily adjusted or it's a lot of pro forma. You know, hey, once you do the slip expansion and once you put in, you know, a restaurant or whatever, you know, all, all this thesis that they have about about how this thing's going to be this hot destination and this huge, you know, multi.

phase development. I just, it doesn't pass the sniff test for me. Yeah. So where's the seven fun, can we, do we think it's really south of Sarasota? Oh, they are in Sarasota. So Sarasota, Siesta Key Marina. It looks like it's kind of it. I think this is, does this kind of look like it? I don't know. And you got to wonder if the listing is actually really this picture. Yeah. See, they say, I mean, they have numerous buildings, the main marina, office, gift shop, restaurant, bar, motel cottages, and boat sales and service facilities. And they have 25 employees. So it's not, you know, unreasonable to think that they are owning and operating all these things, which, you know, if you get a taste and a flavor for marina management, right, it's probably fairly

passive. There's marina management companies who can come in and run these things probably much better than you can as an owner operator. That is a drastically different business than running a motel at the beach or running a restaurant at a marina or running a gift shop. So I think you could probably really look at this thing and figure out where is most of the revenue coming from, where is most of the cash flow coming from, and how do you kind of force rank what business you want to be in out of the, you know, eight different businesses that they operate here. Yeah. Yeah, super interesting.

Okay, so we've got the business listed by Christopher Cogan, and then seven funds is, appears to be associated with Christopher Cogan, who then, they're like a GP. Yeah, like Cogan Realty. So this looks like his, Christopher Cogan, this looks like his day job running Cogan Realty. And then along the side, they've done the whole, like, okay, let's, let's raise some funds and get into, you know, technology investing and all this kind of stuff, which they also like have Corsa seven motorsports, which it says the Cogan's family, the Cogan family's involvement with classic motor cars began four decades ago as a hobby.

Having inherited their father's love for all things mechanical, Chris and his brothers began collecting and restoring racing, showing cars. So these are just, it's just a wealthy family. And they, you know, of course, they own some vehicles. They own some real estate. You know, they have started investing in some, you know, Embara Neurotherapeutics.

Like, this is just a total hodgepodge of a family office. And they're like, hey, you know, the marina, let's see if somebody wants to buy the marina. Yeah, it's interesting because, you know, you got one kid who's a broker, it looks like. And he probably, you know, know, in a situation like this, he probably went to dad or the other folks and said, hey, if I could get us $20 million, so double market for this marina that's underperforming or marginally performing,

would you, would you guys be okay with me selling it and taking commission? And I bet they all said yes, which aligns with the story that this $2 million in cash flow, which makes this $20 million asking price seem totally reasonable, may just be fantasy land. I bet you're talking to this guy. Christopher and he tells you, well, you know, like COVID affected stuff a lot. And we had the wrong manager in there. And they're really only making, we're only really netting 600 grand a year. But, you know, like with the right manager and a little marketing and, you know, you get a Facebook account, you could get this to $2 million super easy. Yeah. Yeah. That's the way. Yeah. That's the story. When we update the motel and, you know, rebrand the restaurant, you know,

he also, he also apparently has a fund, Thameleos to a venture capital fund. But they started Healthy Earth, which Healthy Earth, the company was founded in late 2013 by Christopher Cogan and the team at Seven Holdings with the goal of becoming the leading sustainable foods company in the United States. Like, it's just, this is just random. This is just all random stuff that they're doing. I appreciate that, by the way. I'm good. I'm good with that firstly. They acquired the aquaculture division of a marine laboratory, which was the second largest,

producer of sturgeon, fish, and caviar in the U.S. This is amazing. So they're a sustainable food company, but it's all fish. Wildcaught mullet. You can't make this up. This is amazing. They were a finalist in the international fish competition. So they acquired three different fisheries in three years, or fish businesses.

And then in 2016, they went around and agreed to sell. the whole thing to somebody else, but they don't say who bought it. It's just like, okay, we sold this stuff that we bought. That is fascinating. Yeah. It would be worth, like, if you're in this area, you should absolutely look this, look this Marina up,

sign an NDA, go meet this guy because I bet he's epic. On their latest news on their website, their Ferrari won a top award. at Cavalino-Medino 2021. Oh, dude, they have a YouTube video. Oh, there's video on this later. Oh, they have in this area and you're looking, you're looking for a play.

Yeah, it's him and three other people. Oh, this is awesome. Yeah, so it's Chris and Kurt Kogan, the two brothers. And then they have a CFO and an EA. They look like really nice people. This is kind of what, when I imagine established, wealthy Florida business family. This is kind of the pictures I expect to come up and it's like in the dictionary. They, that owns a marina and exotic cars and, you know, they run a hotel and

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Unbelievable. Unbelievable. And all because dad probably owned one apart. building in Boston and then picked up and relocated to Florida in the 50s before anybody else did and just started buying stuff cheap and holding on to it. And you look up now and they're holding a billion dollars worth of real estate. Like just, just unbelievable cool. I think it's worth, it's worth discussing though. Like, is there a way that this deal ever gets done? Yeah. Who in their right mind could buy and operate a $20 million dollar marina in, you know, kind of a, I wouldn't say an

obscure part of Florida, right? But this isn't like Fort Lauderdale and Miami. The type of people who can do this deal are not signing up to, you know, to run the motel and run the marina and, you know, run the Tiki bar, so to speak. Yeah, I think their only hope here. They talk about the extent of additional land that they have nearby. I guess they kind of hint about that, that there's, There's the land they have. They said here how much land they had, but they have 14 acres, but there's 400 acres nearby. Yeah. So a lot of developable land.

And this is down Sarasota way. So it's pretty, it's pretty down there on the Gulf Coast. What happens is somebody buys this or somebody does this deal. They do it at a discount to asset value for the land, not the operating business. And they probably, you know, scrape the entire. parcel and redevelop it, but it, they're making it sound easy, right? In this, in this deck, of course, that's, that's the job of the person who's pitching the deal. But these deals don't happen overnight and they, they don't happen without just a tremendous amount of blood, sweat,

and tears, which is why the people who do them, this is what they focus on. They, you know, they, they own and operate and flip and develop marinas because it's a set playbook that you definitely want to, you don't want this to be your first go at it. This has got 100% the hallmark of a deal with a wealthy, educated seller who doesn't need to sell, but is very clear that they will make a sale when somebody makes them a screaming deal. And I think that's what you're looking at here. Based on that, as a value buyer personally, I would just kind of keep clicking past this one and wait for a better pitch than look at this deal. I mean, I guess if you win the lottery and your dream is to go buy.

of Florida Marina, live there and run it into the ground. This would be a good buy for you. Maybe if you have like an alcohol problem and you want to own a tiki bar as part of that deal and you win the lottery. So the buyer universe is pretty narrow. I think we've talked about my history of being exposed to people who end up buying places like this as a hobby, you know, like a Bahamian seaside resort, husband and wife team. It's usually the sign the marriage is on the rocks or somebody has an alcohol problem. Those are the two reasons those things get bought. But yeah, I think that's the only buyer that would be looking at something like this. You know, or eventually there's somebody that comes in and can pay this to redevelop the thing. It looks like if this picture is what it is, there's a bunch of mobile homes on here, some shacks, some old apartments. There's an RV park, they say, bait and tackle shop.

Yeah, it looks as a complex. Maybe eventually to where West Coast of Florida and the East Coast gets built up so much that you come in here. And, you know, I think there's, you know, I think it'd be realistic for somebody that's doing a high-density condo development to make something like this work. I mean, if it's part of a $250 million project, then $20 million for the land is not a big deal, especially as difficult as it is to open a new marina. I mean, that's something we haven't really talked about. Like, the value here is environmentally regulatory, like, good luck opening a new marina anywhere. Like, you're just not going to, you're not going to get a new permit. Marino without going through years of just brain damage with the local municipality. Well, and as you can see in all these municipalities, like there will be one person who will sue you and hold up the whole thing, a la the reason nothing gets built in California. You know, that's definitely, that's definitely going to happen here the second you try to dredge up or dig up one little corner or one acre of whatever. Like, you're in big trouble.

But yeah, I mean, kudos to these guys. They have a generational asset, something that's, You know, their dad probably bought for $100 grand in 1965, and, you know, it's been cash flowing ever since and more power to him to take the money and run if somebody's willing to pay for it. I say, you know, I'm not going to blame the, not going to blame the player here. You know, blame the game. It's the type of thing that is fantastic. Well, it's probably somewhere between mediocre and fantastic to own, but it's impossible to buy. Totally. Yeah.

Well, I mean, and the other thing is, you know, I hear on Twitter all the time, people are like, I want to leave like a huge fortune to my children and I want to make life easy for them. Like this is a pretty reasonable outcome there. You know, I think we've seen the bad outcomes if you leave kids too much money and make life too easy for them. But just recognize if you do leave your kids a million dollar you're producing generational asset, they may start blowing it all on random ferraris that they enter in Italian races over it. That are just like, what? Who's doing this?

So have you ever heard about these like super high-end fishing contests that happen in in Mexico. Do you know about these for the ultra wealthy? Have you heard about these? I have a friend who's basically a captain for somebody like that. Yeah. So for those of you who don't know, this is how it works. Let's say you're stupid wealthy. Like you have $150 million in cash and you don't know what you're doing with your life, and you own a $2 million boat. So they will have these contests that happen mostly down in Mexico. So you have your captain fire your boat up and drive it on down there, been 200 grand on diesel to get the boat there. And then they run these massive fishing contests where all

these rich people pay hundreds of thousands of dollars. If you're the rich guy, you fly down there. You don't go in the boat. Yeah. Look, Mills, once you reach a certain level of wealth, you have, the boat is not for you to ride in. The boat is just for you to show to other rich people when you get around there. That's how this works. But yes, you fly down there. You get on your boat. You go out for a day with some captains and some experts. then whoever comes back with the biggest fish wins like three million bucks like that's how these that's how these things work i've never been by the way i don't get invited to this stuff but i know enough rich people now that they're like guess what i did last weekend i'm like no shit tell me what you did they're like yeah i went hunting marlin down in down in florida i won two million dollars in a fishing

contest it's like what this rich people do weird stuff and they could do it out of your marita when you buy this mills think about the possibilities think about the most but actually you know what i want to own. We need to find how to own the rich people fishing contest business. We need to do that on a future deal. That would be a banger. All right. Do we hate anything else about this? Is there anything we like about this? It's near the water. They have a nice picture. I think it's worth the site visit to talk to the guy, to talk to the family. You would remember this site visit for the rest of your life. Do not mention this podcast when you go. Also, okay, here's the deal. For any listeners who, go and tour this, send me photos and a copy of your bill at the Tiki Bar, and I will reimburse you

for it. That's the deal. That's the deal. We'll do it for a challenge. We've got to give the people what they want. Cool. All right. Well, that is it. Anything else on this one, Mills? No, no. Please let us know if you go. Please visit our sponsor and shop from them. They're paying for all the editing and stuff we're doing this. And so it'd be super helpful in our never in a quest to break even. And also do us a favor right now. Open up your podcast app. Go on Apple podcast and leave us a review. We would love that. It will help us spread the word of whatever our causes to more people. So we would really appreciate it. And we'll catch you all next week.