Episode 42: How to Sell an Outfitting Business | Guest Loren Williams

   

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Intro: Welcome to the REALTORS Land Institute podcast, the Voice of Land, the industry's leading land real estate organization.

Justin Osborn: This is Justin Osborne, Accredited Land Consultant (ALC) with the Wells Group in Durango, Colorado. On today's episode of The Voices of Land podcast, we're talking to Colorado RLI member and professional outfitter, Loren Williams. Welcome to the podcast, Loren.

Loren Williams: Yeah, good to be on, Justin. Thank you.

JO: Yeah, man. Why don't you tell our listeners a little bit about yourself? 

LW: Oh, the... I guess the short tour would be I'm fifth generation Colorado native, grew up with a very large ranching family, Northwest Colorado, kind of all over the place. Currently I live outside Grand Junction in Loma, Colorado. As you know I do farm and ranch real estate through United Country Colorado Brokers. A big portion of what we do also is transacting outfitting businesses. I've been a professional guide and outfitter for around 20 years now. Really started guiding in high school, waterfowl hunts. I moved on guiding big game. I had my own outfitting businesses for quite a while. I've managed others. I've done management for large ranch properties and their outfitting. As I mentioned before, we've... A large portion of what we do in our real estate brokerage is transacting outfitting businesses. So I think last week between Gary and I, we closed our 25th outfitting business on there, and we've got a couple more on the pipeline right now, so it's a big part of my life, big part of what we do.

JO: Man, that's awesome, and that's exactly why I wanted to have you on today because it was at a recent RLI event where you and I were just kind of talking about the market and what we had in the pipeline, and I knew you guys specialized in selling outfitting businesses, and I figured it was half a dozen to a dozen maybe, but I had no idea that you guys had closed over two dozen outfitting businesses alone. Not to mention all the other business you guys are doing, but I just thought it would be a good opportunity for kind of you to talk about the niche that you guys have satisfied, that is really truly a work of art in my mind to have that kind of track record. And so talk to us a little bit about that. I know obviously being a guide in high school, you live it. And I think that's one of the great things about the RLI agents is we've grown up in this life. We didn't just decide, "Hey, we're tired of selling houses. Let's go buy a pickup truck and some boots and jeans and call ourselves ranch brokers like other people are doing." So, talk to me a little bit about kind of the path that led you to be the successful agent you are today.

LW: Yeah. Well, and I haven't been licensed all that long, I got kind of licensed back when the pandemic started around 2020 in there, so this is really only my fourth or fifth year as far as doing it. So many of the businesses that we've transacted through our office, a lot of those came along before me, and that's a big part of what Gary Hubbell does. And as you know Gary was a professional outfitter for about 10 years. He ran OutWest Guide Service out of Marble, Colorado there. And that's kind of how I got into the industry was I'd worked a few deals with Gary. Buying and selling and picking up outfitting businesses of my own in there, and he starts talking to me one day and says, "Boy, I think you'd be pretty good at this side of things in the industry." And I hadn't really considered it too awful much until that time. And I also didn't really know that this niche of farm and ranch, land hunting, property sales, and that really existed. I didn't know that there was kind of a dedicated group of folks that were really there to serve that niche and in that market. So it was... I did kind of find it was a bit of an underserved market when we got in. Now, a lot of people, they're hunters and they do things on the weekends or this or that, but they hadn't really lived the lifestyle like I had.

LW: And I come from a, the ag production side of things, the way my family was and the ranch side. So I kind of understood that. I understood how that correlated with wildlife. I understood the value that that can bring to a property. And then when we started getting into the outfitting business side of things on brokerage there, I do do it, I am an active outfitter, I do understand it. I understand what it takes to deal with the forest service and BLM and permitting and how to value that, and what you need for your licensing process, and how to transact these things. How do they typically work? How do you go about maybe from somebody that's never been in the industry before and to trying to get into an outfitting business and go to work for themselves. And so, when we go and meet with these folks and sit down, they interview quite a few people, and when we put our marketing out there and we put our expertise out there and say, "Hey, look, I'm not just realtor, RLI member or licensed broker here, I live this as well. I know what you're going through right now. I'm at the Parks and Wildlife meetings with you. I'm at the legislative updates. It's a big part of our life and our livelihood and our lifestyle." And so I'm kind of in the trenches with them, so to speak at the time, and I understand exactly what they're going through, I know what the difficulties are, I know what the upsides are.

LW: We're able to take a look at how somebody is at their operation and how they're doing things and whether that's say, "Hey, we see some improvement here. This is how you could improve your business to maybe help the market value of it." Or, I've taken a lot personally from me, we've sat with so many of these folks now, I've looked over so many people's books, looked at so many people's operations and websites, I take a lot of what I learned from them and then apply that into my own outfitting business on my side, not just the real estate side, but, I can look at it and I go, "You know what? That's a really good way of doing that. I can't believe I never thought of that before." And so it's actually helped me improve my business and my efficiency on all sides, that gets in there. So it is a niche that not a lot of people can do now. Now they can do it, and you can find a lot of people that'll help you transact it, and have a successful transaction with your business, but to really get in the nuts and bolts and understand it and help it go through much more smooth and more efficiently, that's where our experience and the fact that we do it every day is a big factor.

JO: So you talked about the leases, the forest service leases, the BLM leases. Obviously that's one huge component of a difference between a normal land transaction or farm transaction and an outfitting business. But talk a little bit more about the differences. I've sold lots of businesses that did not have real estate attached, but none of it was ever an outfitting business. Are you valuing the inventory and saying, "Well, wait a minute, these 10 horses are 20 plus years old, so you're not gonna get that kind of money, and these saddles are worn out, and your book of business is this,"? Or kind of talk to us a little bit about that.

LW: Yeah, yeah, absolutely. The first place we kind of start usually are those permits. There are a lot of just public land-based permitted businesses when it comes to outfitting. Now that could be everything from hunting operations to horseback and trail riding, fly fishing guides, river rafting, et cetera. So it's not always just singularly hunting focused. It's in there. Many of these permits encompass a lot of things. They go through different seasons. So we like to sit down, look at what are the permits? What are your area? What are you entitled to do? What type of business has this entitled to you to do, and what activities can you have? And then from there, and a big one then there is the user days. And these are a lot of things that we have a hard time explaining to folks that come out from outside the Rocky Mountain West.

LW: They don't really understand the public land dynamic that we have out here and trying to explain to them how these permits work and who's allowed to do what and what that permit entitles you to. So that's usually a big conversation that we have with folks leading up to it. And then from there, we'll move on to the assets and equipment of the business. Yep. We know I'm in the horse world. I got 30 of them right now, I'm looking out my window at out here. So we understand what makes good mountain horse, does good stock, what's your use, what's your life use of age in there, your tech, your equipment, your book of business. There's a certain amount of goodwill that goes into pricing and marketing a business, as with any other, same as this. If it's somebody that's been in the business 20, 30 years, they've got an excellent name and a reputation, and they have a large book of business, they have a large repeat clientele. That those are all things that we take into consideration where pricing them. Sometimes you... We counsel our sellers and the folks around when they first start acquiring with us, and they say, "Is it a right time to sell?" We say, "Well, you wanna sell when you want to, not when you have to." We don't want to catch these things on the down slide. We don't want to be, "Okay, well, it's been kind of going to seed the last few years, and maybe it's not as big as what it once could be."

LW: But a lot of times those sellers still want that price for that business of when it was running at its absolute peak.

LW: So we try to figure out what kind of capacity do you have? What's your rate of return on these things? What are your margins? What do you have? What's included? And that could be anything from the horses to ATVs, rolling stock, tents and equipment. Anybody that's gone out and purchased a new canvas wall tent lately knows that is not a cheap endeavor. So having good serviceable equipment and what that comes with. Is this a turnkey type operation? Is everything gonna be included? Is this gonna mostly just be the permits and a little bit of equipment? If you're outfitting on private land, how does that dynamic work? Do you own it? Do you lease it? What's that gonna be like? One thing we find with permit-based businesses is since there isn't a lot of times a piece of real estate that's attached to it, if it's somebody that's gonna come in and purchase this business from out of area, where do they keep their stock? Where do they keep their equipment? Where do they live during the season? Is this gonna be a relocation for them? Do they plan to live in the community that they're gonna operate this outfitting business out of? Or are they gonna operate it from another state and only be here during their season? And if they need a place to live while they're there, what is that market like? 

LW: I could sell you an outfit out of Rangely and find a home for you up there for a very reasonable price that you could probably buy and live on and live within the area that you're gonna operate. But if you're looking at, say, an outfitting business that is based out of Aspen, with a $15 million price tag on your average home up there, is that something you're gonna be able to do or do... Or is this, we need to help you find temporary lodging. Do we need to help line you up with employees and staff? Can we point you in the right direction of that or possibly into a business manager? So, and there's a lot of moving parts that go into it, and we take all those into consideration when we're putting the value of what we think on the business. And there's some kind of, I wouldn't say standard multipliers in there, but a lot of times we will look at assets and equipment, permits, and the operation itself, and then we will also look at your cash flow. And we usually come up with a combination of a way of valuing these, these businesses through a combination of assets, equipment, and what are your books saying? We like to see a good three-year average on there, and we'll look at your gross and your net, and then we'll come up with a, "Okay, here's where we think this should transact at."

JO: So just a little different than from your typical land transaction? 

LW: Yeah, no, this is a little bit higher level stuff. But land transaction, they have their own things in there. You're looking through surveys and property lines, and you're looking through water rights and mineral rights and easements and everything. And so it's... There's similarities to it as far as your due diligence and your homework that needs to go into it to figure out exactly what you got, what you're selling, and what do we think it's worth. So it does correlate in there, somewhat in it, but it's a different side of things.

JO: Well, and what cracks me up, man, listening to everything you just said there, and all the details, and the years of experience. Yeah, you've been in the business, the... I should say the licensed real estate business for four or five years, but you've got 20, 30 years of experience that have led you to this point. And it's so funny to me, listening to these residential realtors that are panicking and worrying that, "Oh, we're gonna go away because of technology and AI and these algorithms." And, everything you just said here the past few minutes, there's no way you could possibly put that in any type of algorithm that's free online and say, "Okay, Mr. Outfitter, here's what your business is worth, and here's what I can sell it for, and here's my reduced commission because I don't bring any value to the table like a lot of these residential agents are doing." It's just, it baffles me and everything you just said there is a true testimony for RLI and the education classes that we teach, and the reason you see these people with the ALC designation just continuing to rise to the top and do business just like you and Gary and all your crew is doing when everybody else is really panicking.

LW: Yeah. And there's been a lot of that, been a lot of panic in the industry, particularly the last year or two here. And people are saying that, and look, I gotta tell you that if that's... If that's your... If that's what you bring to the table, then you probably are gonna get replaced by an app within the next few years, let's say. You're probably gonna get replaced by an internet search engine or something. And that's where, like with most anything else, you have to have a value proposition. What do you bring to the table? Why should I pay you this for this for you to do it? Well, here is why, and exactly what we just laid out. Because we understand these things. We know how to do it, we know how to value it, we know how to get the job done. We know how to work with permit administrators from different agencies. We know how to work with state licensing agencies on these things. We know how to work with parks and wildlife, explain to people everything from land owner preference programs up to their units and their season dates and how all this works out, that all goes in there. So if you don't have that value proposition, then you probably are one of those that's gonna be either out of the business or taking a very reduced commission on it. 'Cause you've gotta bring something to the table for your client.

LW: And as it is all things, we're fiduciary to them, we're responsible for getting these things done for them. And if we're constantly having to ask them questions, and every time an interested buyer calls, we have to get the seller on the phone to explain everything to them because we don't understand it, then what did we really do? 

JO: Right.

LW: Are we just an operator? Are we an Uber driver that takes people around to look at things? Or do we bring insight and expertise to it that says, "You know what? I'm glad... " Yeah, I just had this conversation with a guy the other day. He's been working on things. He'd always dreamed of being an outfitter. He just didn't quite know how he could get it done. And so we started talking about all the different ways that you could possibly finance something like this. Whether that's an owner carry portion, SBA loans, different methods that you would go through like that. We helped counsel them on how to put their paperwork and their applications in to be able to get this done. And they'd been looking for years and had never had anybody explain these options to them as far as purchasing goes. And they thought it was always out of reach for them. And just by knowing this and going through it, then we were able to help that out. And now we're probably gonna end up getting a deal done on another one that we have listed with this particular buyer, just because everybody they'd spoke to over the last few years never supplied them with that information.

JO: Man, that's great. And I wanna come back to that. But before we do, I want to go back to something you said a few minutes ago, and that was the value. What do you bring to the table? Your insight and your expertise. And specifically you said, "Encourage your sellers to sell when you want to, not when you have to." And man, I see so many people miss that opportunity. It takes years of relationships with your clients to say, "Hey, now's the time to sell." Like you said, three years of good books. When we're selling these big ranches, it's oftentimes when it's in its prime, they don't want to sell. And then it's, "Oh, I'm getting up into my upper 70s, late 80s. I can't irrigate anymore. I can't repair the fences anymore. I don't want to pay whoever it is that was my ranch hand and replace him because now he's gone." And then we end up selling these properties for 20, 30 cents less on the dollar than we would have if we would've sold them in their prime. And so I totally agree with what you said then, and I didn't want our listeners to miss that point. But let's go back to the guy you were just talking about. Tell me a little bit about what your typical buyer looks like when you're selling these outfitting businesses.

LW: Sure. I don't know if there's a typical buyer that's in there. We deal with a lot of... And that's kind of our job too, is to help identify based on what the business is and what that it brings to the market is, who is the buyer for this? If it's a small outfit, not a lot of assets and inventory and things to go with it, that may be at a lower price point, so that kind of helps maybe some of your younger people get into it that are maybe wanting to break into the business but they don't have a couple million dollars to go spend on private property and on a ranch and some big well-established outfit that's there. But being able to get your permits and operate on public land is a great way to have 50,000 acres. You can operate a business on there that you don't have to own. That you can get into for a fairly low entry level as far as the price goes. So we may get somebody that's, they've been guiding for other folks for years, and now they're finally ready to strike out on their own. We also look around them, see who their competition is and who they're competing against. Know who has the outfit to the north, to the south, who's operating in this area, in that area. A lot of times a lot of our sales are through people that are just expanding their current businesses. And maybe they've always had their eye on the, just like any farmer, rancher or anybody else, you've always had your eye on that property next door down the road.

LW: And when it comes up for sale, sometimes your buyer is the one that's closest to you right there.

JO: Okay, that makes sense.

LW: So we like to let everybody know within the area, we pull all the permits and all the outfit numbers and names in the area, and we'll let them know, "Hey, this is for sale." And many times we find our buyer from an existing pool of other outfitters that are already out there that are looking to expand their operations. So you got everything from your entry level folks, to your people that are expanding. We do see maybe somebody's been a firefighter on the East Coast and now they're just ready to go out and have this lifestyle. And so we'll get people from all over the country that, there's a certain freedom associated with being able to get paid to ride a horse into 10,000 feet and hear elk bugle and that's, so it's... So I don't know if we have a particular one set of buyers there that we try to identify, but we really like to see what it is that we have available to the market. And what kind of person would that fit best with? And we... Sometimes somebody will come along and they'll be really, really interested in it, and they really want to purchase an outfit, but after talking with them for quite a while, it might be a little bit more than what they're ready for. So we can either help counsel buyers on the site, and we can act as buyer's agents as well. If somebody wants to go look at a business of this type, we say, "Hey, you hire us as your buyer's agent.

LW: We'll make sure that you're getting the best deal and that you fully understand this operation and that." And so it may be a case where we say, "Look, this one might be a little bit more than what you could handle successfully out the gate."

LW: So maybe we try to show them something else, or maybe explain to them different options for it. Or maybe we suggest, "Hey, look, we've got a pretty good... We know a lot of people in the industry, maybe we can find you a manager to take on." Or maybe it's an existing employee that's already with the outfit, or possibly the owner of that outfit is willing to stay on for a year or two and manage for you till you get your feet under you and you really see what the day-to-day operation is of this, and then you understand it. So we wanna make sure it's the right fit for them too. We don't wanna set anybody up for failure. We want our buyers and sellers to all come in, all get along, all move on to a successful operation, because in a few years, when that person is ready to expand, or when they've had their run and they're ready to retire or move on, then we will be back there again to transact for them again as well.

JO: That's great.

LW: So it's one of those where we've always got our eyes open. We're always... And we keep a good eye on, who's buying these? Who are we mostly selling them to. The last year or two, it had slowed down a little bit. There's a political environment in Colorado that's making it tougher on people in the rural west. Different regulations, different season dates, different numbers of tags shifting and et cetera, and that's where... I sit on a few boards. I'm a state board chair for the Colorado Sportspersons Roundtable. I work with CPW on a lot of issues. So I'm really up to date on what do we have going on. Somebody may come in and say, "Wow, we're really interested in that outfit in that area, but tell us about the winterkill. How's the season dates gonna change up there? Are they talking about limiting tags in certain areas?" So, just like anything you wanna stay up on your government regulations, anything that may be happening that could be a factor in that transaction. And maybe it's, "Hey, the northwest corner was hit pretty hard by winterkill. Maybe we should look to the South. Maybe we should do something different."

JO: So I wanna make sure our listeners picked up on something you said, and that was that you're thinking about the future relationships, or the future business. It's not just, "Okay, Mr. Buyer, I got you this deal. Nice to meet you, Mr. Buyer, nice to meet you, Mr. Seller. Let's move on to the next one." You're really focused on making sure that there's a relationship there because you know that this guy is gonna work for, I don't know, five to seven, 10 years, and then there's gonna be more business on the other side. And I think right now there's so many people in our industry that unfortunately just focus on the deal instead of the relationship. And so I give you props on that. And I had a question kinda regarding, I guess, where this business is coming from, are you getting a lot of referrals from other realtors that say, "Yeah, I sell businesses, but I've never sold an outfitting business. Let me get you in touch with Loren and Gary and their crew,"? Or are these buyers and sellers finding you where you're not seeing a lot of referrals? 

LW: We get some, some from the referral side. We'll get a few, and if it's... Depending on who it is, and I've had this happen with us from RLI, I'll have somebody come up to me and say, "Hey, I got this down here." The person has an outfitting business, or they're running these activities and I'm just not sure if I can take it on. And I'll have that conversation with them, and maybe at the end of it, I say, "You know what? I think you can do this and we're happy to help you out. Call me for advice if you'd like." But if not, we say, "Sure, happy to take that on as a referral." But honestly, it mostly comes from just about every one of them that call us, whether it's... Now, I'll just say I have a lot of personal relationships in there as well, either through the outfitters associations and things, it's kind of a small world when you get involved, and a lot of people know each other, but there are hundreds, if not maybe even a couple thousand different types of outfits and outfitting businesses in like particularly the state of Colorado. Now we do them all over the west, but, that's really where my expertise lies, is within the state.

LW: But most of the time when we get a call from somebody, they say, "You know what? I just typed it in the search engine, outfitting businesses for sale, and the same two names always seem to come up, Loren Williams and Gary Hubbell in there." And so they constantly see our name attached to these listings and these solds and all these that are out there. And that's, that speaks to our marketing and our SEO and all the different things that we do to make sure that our listings are being seen and being seen by the right people in the right places. But nine times out of 10, when somebody calls to list, if I don't know them personally, if they didn't get referred to us by a previous client or a broker, that was just them simply going out there and looking and searching online and going, "Well, heck, every time I find one and I click on it, your name's at the bottom of it, so you must be the people to call."

JO: That's a great compliment. Well, listeners, for those of you that wanna learn more about this topic, you can certainly reach out to Loren. Or you can go to the RLI website rliland.com, under the Find A Land Consultant tool, and you can find somebody like Loren that specializes with this in your area. And just a reminder that we all do have a code of ethics we have to abide by, and one of those things is making sure we're not dealing in transactions that are outside of our wheelhouse. So I can tell you if I was ever approached by one of my clients to sell an outfitting business in Colorado or New Mexico, I know the first person I'm gonna call Loren. Man, it's great, you've obviously got a huge depth of information on this topic. Any other kinda last minute tidbits you'd like to throw out for our listeners that we haven't had a chance to hit on yet? 

LW: Well, I don't know, I would just say that if it is something, whether you're an experienced person in the industry and you're looking to expand, or if you're just getting into it, just work with the right people. Many folks, they think they can do it on their own, and a lot of times they can, and that's fine. But if you can bring in somebody like us to counsel you, whether from the buyer's side or the seller side in there, in the long run, you're gonna be so much further ahead. It is just such a big advantage to have that. And as you just said, a large portion of our code of ethics is competency, and so dealing with people that understand your language, what you're talking about, what you have, maybe what you're looking for, et cetera, is a big part of it. You can't just pull anybody... Well, the yellow pages don't exist anymore, I'll date myself by saying, "You can't just pull somebody out of the yellow pages," but that's gonna end up in the long run cost you either time or money, and in business, they're both... They equate the same thing. So use a professional, use your resources at hand, and find out what it is that you want to do and find the right person for the job.

JO: Well, I can't agree more, man, and I think that's perfect segue for a little ALC plug. And listeners, if you wanna become an expert in the land and be best in the business, consider earning your Accredited Land Consultant designation. The courses will build your competency and confidence when conducting land transactions, and they'll earn you credit towards the education requirements towards the ALC designation. If you wanna see upcoming course offerings, go to the learn tab on RLI website, rliland.com. Well, Loren, thanks for joining us today, man, and helping us better understand all the ins and outs of the outfitting business. If some of our listeners wanted to get in touch with you directly, what's the best way for them to do that? 

LW: Well, maybe the simplest would be to go to one of our websites and find our contact information on there. You can either go to aspenranchrealestate.com or uccoloradobrokers.com. But I can be reached directly at my phone number at 970-314-0324 also.

JO: Awesome. Well, thanks for sharing that info. And for more expertise on land real estate topics, be sure to check out the RLI blog, follow us on social media, and of course, tune in for upcoming episodes of The Voices of Land Podcast.