Right, so we’ve done the basics, and seen a Dive Centre we like somewhere, possibly online at PADI.com in the Employment boards.
We’ve had some communications with the current owners. Now to the exciting next step, actually getting on the ground and under the water at the place.
Stage 2: Visit the Dive Centre…
In my opinion, after the initial discussions and info have passed between the 2 parties, then it’s time for a face to face sitting outside the Dive Centre to take it to the next stage. This is in actual real terms, the way the seller weeds out the tire-kickers and the serious.
This is the simple first point where the Seller can tell how committed the potential Buyer is in the deal. If they are willing to spend the money to fly out to the tropics to see the business for themselves.
This is not a cheap endeavor by any means, and shows that the buyers have the available funds to make a sizable purchase such as a dive centre.
Costs of trip
Expect that the dive centre and current owners are NOT going to give you free diving or free hotel stays etc just because you have said you are interested in buying the business. This sometimes shocks people as they expect to be woo’d by the business in an effort to sway them to buy.
It must be remembered that it is VERY unusual for the first few prospective buyers are going to be THE ONE. This means the scuba business, normally a small or medium enterprise, is going to go through many of them and they are not going to endure the cost of wining/dining or diving for free anyone who says they are interested in buying. This could be a large number of people over the months and possibly years. In fact in normally is.
Again this is a great indicator to the seller about the solvency of the prospective buyers. If they cannot ‘afford’ to pay for a few nights hotel stay and a few dives, then they sure as heck don’t have enough to drop on a business venture out in the tropics.
This is normally a sticking point between Buyer and Seller in the scuba diving business. For some reason the dive instructors wanting to buy a dive centre think that any business owner will give them full financial statements , balance sheets and P&L if you just say you are interested in buying and want to ‘see the books”.
Anyone with an ounce of business acumen will just not be doing this. This is to protect both the Seller and Buyer in the end.
The seller doesn’t want any Tom, Dick or Harry to have this seriously confidential information. This could be used by competitors, or banks, or creditors, or just the guys next door to gain advantage over the company. That would be gross negligence on the part of the business owner.
Not to mention unethical and unfair to staff members because confidential wages/salary information are in there, and that could (and probably would) impact the lives of all the staff!
The buyer shouldn’t want or expect the seller to give it to everyone either!
The average dive business for sale will get 10-20 emails a week for 6 months during the time they advertise the dive centre for sale. These emails are the first ‘tickle’ and normally get answered with the general MoS, more than likely nowadays through a password protected web pages on a website.
Now at some point one of the interested parties becomes the Buyer who owns the business. At this point , THEY don’t want every Tom, Dick or Harry to have this seriously confidential information, that is now THEIR seriously confidential information.
Non-Disclosure Agreements aside, once the info is out there, it’s out there! The proverbial cat is definitely out of the bag! Lawyers will not resolve this issue, a law suit will not put the cat “back in the bag”. Especially when most of the prospective buyers who have been given the info are not in the country! NDA’s really count on everyone being civil and honest… Hmmm, humans… They don’t really rely on Courts and Lawyers in businesses this size.
The Dive Centre Walk Around
So now the buyer is on site and has access to the dive centre and its front end operations. It is very likely that the seller will allocate a couple of days to show the prospective buyer around the dive centre, the dive boats (if any) operations and how it runs along.
- take notes in note book
- have some questions ready in the note book so you don’t forget to ask
- take lots of pictures of EVERYTHING
once again however the ins/outs of how the centre runs and how operations are held together are not the subject of this walk-around, so don;t expect to be shown the Point of Sale (POS) computer or bookings book(s) and all the background running info. This is very much the same as above, proprietary company info. It’s how the company keeps ahead of the competition…
So with all this “you can’t see this and you can’t see that” what the heck ARE you going to be able see and inspect. An awful lot, especially if you know what you are looking for.
We have done this ourselves. My partner and I can spend a day in and around a dive centre, going for a dive as clients, and returning and having a Coke on the deck outside it, watch a few DSD’s in the pool, see the students set up and start, and pretty much tell you how it runs, what’s going on and the ins and outs. Give us a price list and chance are we can extrapolate and give you pretty good number sin gross income as well… However this is with over 40 years of combined experience running dive businesses in the tropics in many different locations and countries.
Some Questions to Ask
Here are some good pointers for questions to ask:
Get an idea of the run of day
- What is the normal working day?
- Start finish times?
- Staff work all day or is there and early/late shift?
- Number of dives offered?
- Night dives, how are these run?
Resort and Hotels
- Which hotels/resorts feed the dive centres?
- Is the dive centre on site to these?
- If not how are divers accessed?
- Is there a meet & greet at any of them? Does dive centre attend?
Boats and Docks
- Are boats involved ion the operations (seriously, many shore dive only, think Bonaire)
- Are the boats owned by company or leased/hired?
- How old are the boats
- How old are the boat engines, especially if outboards…
- Where do they get fuel, how simple?
- Marine Authorities, how do they run in this country in regards to rules, regulations and surveys? (if at all!)
- Are the captains qualified or trained (not just “we show ’em, they pick it up…”)?
- Which agency does the dive centre and instructors teach?
- Approx. how many students course done in a year/month/week?
- How is confined water taught, in a pool or in the ocean?
- Does the company service all its own scuba gear? scuba cylinders?
- Boats and specifically boat engines?
- Parts from where?
- Where does all the paperwork get done, recorded and stored?
- PADI forms and all that jazz?
- PADI supplies bought from PADI or locally (more and more doing this to avoid huge shipping and duty bills and hassle)?
- Accounts, how are these done?
- Cash handled or all in charges to hotel rooms and prepayments?
Now of course there are other things that will pop into your mind as you go along. Scribble them down and write down answers.
Also remember that if the owner or manager says “not gonna give you that info right now” that you know why this is the answer, see above under Financials.