Buying Outdoor industry companies?

[TheWhitetailNut]

When I heard the news Defiance Machine was sold and who bought it my heart sank. Not because I thought It would be ruined, but because that new owner had already bought several companies in the space. Something I'm very good at.

My whole life my goal was to work in the outdoor industry. Once I found a knack for business, I decided it would be ok if I built a company that allowed me to spend a lot of time in the outdoors, I eventually did that. Now I have several Private Equity firms interested in buying my Company and was faced with the possibility of retiring at 45. After the initial feeling wore off I realized I'm not built for retirement. I need something to invest in, improve, and develop.

Consolidation is not new here: Many outfitters own multiple outfits, the gun, ammo, and clothing arms are already consolidated. For me though, I would not want to flip the asset like a run down house. For me its about living a small boys dream.

Have you ever built, bought, or sold an outdoors company?

 

[180ls1]

No, but I am a financial advisor and benefits broker who works on the business / business-owner side. You can see the attraction, especially with all the stress, pressure, hours worked, and related that an employee cannot grasp. Often it's a health event, either personal or with their family that changes things, and having seven figures waved in front of your face will tempt even the strongest.

That said, many times they retire only to come back.

I am in the same boat as you. I'll be able to retire early but I'll never do it, or at least don't plan on it. Why would I when I can keep helping people as well as myself/family?

 

[Duckhunterbrad]

A great friend of mine built up an outdoor company that he built up and sold for a small fortune. He stayed on contractually obligated to do so. He watched them gut his company for short term profit. They later sold the company again and he stayed on as well. The new owner seems interested in long term success and he seems to be enjoying what's happening now, but I know the first owners absolutely killed him when they only had short term profit goals.

 

[JakeSCH]

I recently bought an offroad autoshop. Not hunting / fishing but there is some overlap with upgrading and repairing 4x4's and SxS. Funny enough, it is probably what hunters spend the most on.

Right now i am growing it and consolidating several mom & pop shops that the services intertwine.

 

[180ls1]

A great friend of mine built up an outdoor company that he built up and sold for a small fortune. He stayed on contractually obligated to do so. He watched them gut his company for short term profit. They later sold the company again and he stayed on as well. The new owner seems interested in long term success and he seems to be enjoying what's happening now, but I know the first owners absolutely killed him when they only had short term profit goals.

Yeah, VC can be heartless number crunchers.


That said, many business owners didn't set to be business owners nor do they truly like it. They loved building homes (or whatever) so much and developed such a good reputation that things took off and it grew to a separate beast. Now, instead of building homes, they are running a business which is vastly different and something they do not care about or have an interest in. That VC $$$ is a nice escape.

 

[TheWhitetailNut]

No, but I am a financial advisor and benefits broker who works on the business / business-owner side. You can see the attraction, especially with all the stress, pressure, hours worked, and related that an employee cannot grasp. Often it's a health event, either personal or with their family that changes things, and having seven figures waved in front of your face will tempt even the strongest.

That said, many times they retire only to come back.

I am in the same boat as you. I'll be able to retire early but I'll never do it, or at least don't plan on it. Why would I when I can keep helping people as well as myself/family?

Exactly. I learned a heck of a lot the hard way I now get to apply to something I love. Sadly, so many of the guys I meet with don't know they already lost their leverage. The business is in decline. their health is in decline, or both.

I think of one guy in particular though that built a small company with a incredible reputation after his main working life as an engineer was over/nearly over. But the companies reputation is his, and there's no evidence it will survive when he passes.

 

[Marshfly]

I wish I had sold my company 10 years ago when things were growing like crazy and the market was hot. Now it is worth a fraction of that value due to local market conditions. Not outdoors related. You never know what the future holds for life nor the business environment. IMHO, you can always build another one if you want. You may not be able to attract the same multiple again.

Just another viewpoint from another mid 40s business owner.

Selling your business also doesn't have to mean "retirement." I am actually building an entire new career while my wife runs that business almost without my input.

 

[TheWhitetailNut]

A great friend of mine built up an outdoor company that he built up and sold for a small fortune. He stayed on contractually obligated to do so. He watched them gut his company for short term profit. They later sold the company again and he stayed on as well. The new owner seems interested in long term success and he seems to be enjoying what's happening now, but I know the first owners absolutely killed him when they only had short term profit goals.

This is the real problem with the vast majority of investors, they aren't operators. I've seen lots of trades "HVAC , Plumbing, and Electrical" businesses sold in the last 3 years only to be shell of their former self. I'm glad he's enjoying himself, he must be if he's still there. Once people get past the money, only the mission matters.

 

[ODB]

What % of business creators do you think go into it with the intent of selling to some larger entity. Meaning it was only created to be sold versus created to be run.

 

[fatlander]

Put your time, energy, expertise, and wealth into improving the resource rather than further pillaging.

The North American Model is in peril right now. We don’t need more private equity, we need less. Nonprofits that put the resource and experience over the bottom line of their corporate sponsors would be an incredible breath of fresh air. I’ve got time and money I’d love to donate, and frankly I don’t want to give it to the current system that is hawkishly pushing R3 for the sole reason of growing the customer base.


Sent from my iPhone using Tapatalk

 

[tam9492]

I had a hunting-oriented start-up I founded in college and ran for a few years before time (wife, real career and kids) and cash dried up. Didn’t try too hard, but never found a buyer for inventory or IP.

I’ve been looking at another avenue that would be much more passive but would still lead to some income and experiences.

Happy to chat about both by PM!

 

[Macintosh]

not a business owner--maybe someday, but thats a nuther ball of wax. I've worked for a couple outdoor companies that were sold, one being a globally large outdoor company. Most of the folks I worked with got into that industry because they were practitioners of those outdoor pursuits, in this case rock and ice climbing. Spent 20 years building this brand in the US, and had a major role in turning it into a fairly influential brand in that space, very much so in the technical categories. The company was owned by a very long-view family consortium, and apparently the kids werent interested in running it, so they hired a new CEO whose job was to sell the company and make a profit within 5 years. I watched that guy gut everything the company stood for including the people. What was a technical company defined by function, almost overnight turned into a smoke-and-mirrors marketing company focused on fashion. Ended up butting heads with my boss the US CEO (the third in two years), and decided I'd quit because if I didnt one of us was going to strangle the other at some point--think we were both relieved when I left. they sold a month or two after I left to a PE company, which has driven out even more of the good folks left. There's a few good people left at that company, but just a few. They may be more profitable now, and their stock is probably up, but in hindsight I should have left long before I did.
I do know one guy who started what is now a large-ish outdoor lifestyle apparel brand, and sold it. He ended up buying the company back a few years later. Never talked to him about that, but I'm certain he regretted selling and didnt like the direction they took the brand. If your focus is on building a better mousetrap around a personal passion, I cant imagine selling to any corporation is ever going to be completely absent some regret.

 

[SDHNTR]

I wish I had sold my company 10 years ago when things were growing like crazy and the market was hot. Now it is worth a fraction of that value due to local market conditions. Not outdoors related. You never know what the future holds for life nor the business environment. IMHO, you can always build another one if you want. You may not be able to attract the same multiple again.

Just another viewpoint from another mid 40s business owner.

Selling your business also doesn't have to mean "retirement." I am actually building an entire new career while my wife runs that business almost without my input.

This is something to consider. Professionally, I deal with a lot of clients who have sold or are considering selling their successful businesses. The happiest tend to be those who sold at the right time, when valuations were highest, with multiple offers. Then they went on to either happily retire by choice, or go on to pursue other business interests, again by choice. That could also mean staying on with their former company as a consultant or employee for a period of time.

The unhappiest tend to be those that turned down an offer because they thought their business was worth more, missed the window of opportunity for whatever reason and now regret it.

 

[TheWhitetailNut]

I recently bought an offroad autoshop. Not hunting / fishing but there is some overlap with upgrading and repairing 4x4's and SxS. Funny enough, it is probably what hunters spend the most on.

Right now i am growing it and consolidating several mom & pop shops that the services intertwine.

That's fantastic. Also a passion industry.

 

[TheWhitetailNut]

What % of business creators do you think go into it with the intent of selling to some larger entity. Meaning it was only created to be sold versus created to be run.

That's a good question, perhaps too good for me to answer. I will say 10 years ago I never even heard of it being talked about, but its common now.

 

[TheWhitetailNut]

Put your time, energy, expertise, and wealth into improving the resource rather than further pillaging.

The North American Model is in peril right now. We don’t need more private equity, we need less. Nonprofits that put the resource and experience over the bottom line of their corporate sponsors would be an incredible breath of fresh air. I’ve got time and money I’d love to donate, and frankly I don’t want to give it to the current system that is hawkishly pushing R3 for the sole reason of growing the customer base.


You're not wrong. I'm pretty certain most of the current orgs are far more concerned with the health of the organization than critter depicted on the logo. Endless fundraising, and the funds generated are invested in marketing for....more fundraising. We don't need more hunters, or even hikers. We just need more people to recognize those ecosystems need to exist.

 

[WCB]

My dad thought the same thing and 6 months in he wished he would have did it 5 years ago when he originally sold the company. Of course he is 69 sold the business at 64.

If you would have zero worries about money going forward if you sold at the age of 45 I have zero idea how you don't take that deal. Nobody said you have to "retire". But take the money and run. Then while swimming in it like Scrooge McDuck, take your time and figure it out.

Do you have any idea what kind of "outdoor" company you would be interested in?

 

[TheWhitetailNut]

My dad thought the same thing and 6 months in he wished he would have did it 5 years ago when he originally sold the company. Of course he is 69 sold the business at 64.

If you would have zero worries about money going forward if you sold at the age of 45 I have zero idea how you don't take that deal. Nobody said you have to "retire". But take the money and run. Then while swimming in it like Scrooge McDuck, take your time and figure it out.

Do you have any idea what kind of "outdoor" company you would be interested in?

I guess to be honest, I started the company to do work I was proud of. Money was important, but I never paid myself more than someone working for me could make. I do agree with others here and elsewhere the window is closing and its time.

I'm most interested in precision rifles and components right now. A direct to consumer model and move the wholesale side of the business secondary. It's not as human labor dependent as what I'm used to and I see some synergies within the market. Plus it scratches my technical itch.

 

[SDHNTR]

Some more unsolicited advice from what I’ve seen professionally…

If the business is successful, provides well for your family and you enjoy it, don’t sell unless it’s enough money to not have to ever worry about money again.

I have a client who turned down a $5mil+ offer for his engineering firm just before Covid. Biz was cranking and he thought it was worth more. Fast forward a couple years, his market tanked (a lot of office RE construction), he lost contracts, lost employees, things turned into a nightmare and made him miserable. He hated it and wanted out. Went back to the same buyers as before and walked with about $600k and a job offer. He’s now a working stiff, has to answer to the man, has no autonomy, a restrictive non-compete, and is even more miserable. He wishes he had held on, restructured as needed and built the biz back up for a future sale. Worse yet, he (his wife) spent all the money on a home remodel and likely now will be working for the man for the rest of his working years.

Again, don’t sell a good biz unless it’s FU money. And if it is, strike while the iron is hot!

 

[SDHNTR]

I guess to be honest, I started the company to do work I was proud of. Money was important, but I never paid myself more than someone working for me could make. I do agree with others here and elsewhere the window is closing and its time.

I'm most interested in precision rifles and components right now. A direct to consumer model and move the wholesale side of the business secondary. It's not as human labor dependent as what I'm used to and I see some synergies within the market. Plus it scratches my technical itch.

A one stop shop for good precision rifle components would be a true disrupter. No one likes having to buy stuff from 6 different shops, all with different lead times and delivery dates.

Reputation of the ownership aside, The Extreme Group comes pretty darn close.