Industry Insight: Having the right software can increase the value of your Holiday Park business
Company A – The Acquired: You spend years building up your holiday park; you make sacrifices, many of them personal as you put business before family, leisure and sometimes health. It is a familiar tale and when one decides that the time has come to sell-up you want, and deserve, to get the best value you can for your life’s work.
Company B – The Acquirer: You have a reputation for building businesses and your investors expect you to maximise the return on the money that they have entrusted in you. To really perform, you go down the acquisition route. You know there are plenty of holiday parks out there where owner managers are looking to exit (or stay on with a view to cashing in).
The conventional view for most acquisitions is that Company A wants to get as much cash as possible from Company B as a single up-front payment and with no tie-ins. Meanwhile B wants to give as little to A as they can get away with, but secure the transaction by applying all sorts of warranties and penalties on A if it goes belly-up. On the face of it, these are two completely opposing strategies, and have hitherto been reality for many acquisitions, often ending in neither party realising best value.
So, what has this got to do with IT systems? Well, firstly let’s consider the situation of company A: All too commonly, owner managers build their parks around themselves; they are the king-pin without which the company does not operate, or exist! Those companies rely on Mr or Mrs A to determine prices, unit sales, manage park operations, agree contracts, authorise billing and sometimes even raise the invoices as they are the only people who know the specific prices to bill. They complete the month-end accounts and keep a watchful eye on operational and transactional costs. The owner is so embroiled in the business that they are able to manage it in their sleep.
The sad thing is, if one day they didn’t wake up, the park and its operations would disintegrate very quickly. Investing in good business systems to manage and run the business is your life insurance whilst you own the business; good business systems replace the king-pin and mean that the business has true value with or without Mr or Mrs A. And once you have made that transition, you can choose to step back from the business a little or sell, realising true worth and minimising any hold the acquirer may have on you.
For the acquirer, taking over a business where one can extract the owner manager is generally the most desired outcome – it means that company A becomes part of company B overnight, thus imparting values, systems, processes and controls immediately. The acquirer wants to know that when buying a holiday park, they will see a short term valuation increase to sell the business on again. In fact, acquirers see IT systems as a way of increasing the value of the company not only in terms of improving business processes and profitability, but also in terms of adding the system as an asset to the balance sheet. If the acquired company does not have good business systems in place, and sometimes even if they do, being able to implement your systems quickly, and we’re talking weeks not months, can secure the investment by stamping your mark on that business. By already having an ERP system installed, there are clearly defined processes and controls in place and there is full visibility of its performance, stress points, bottlenecks and capacity to negate cost across the expanded business. Good business systems, with a well thought out and proven roll-out plan, can make this happen. All that’s left is to change the sign over the door.
So, whether you are planning to be acquired, or whether you are the acquirer interested in their holiday park, good software for holiday parks will be a significant success factor in achieving true value.