August 27, 2020
GRAND CANYON RAILWAY & HOTEL – to me this is a great story… and in some ways, it mirrors the journey many of our clients are on.
When returning from our family vacation this year, we decided (on a whim at lunch) to travel about 3 hours out of our way to spend the night in this picturesque hotel and the following day to ride the rails to experience the Grand Canyon.
Originally opened in 1901 - even before The Grand Canyon was proclaimed a National Monument (1908) and eventually a National Park (1919), the historic Grand Canyon Railway & Hotel (and depot) are now rightfully listed on the National Register of Historic Places.
Fast forward to the year I was born, 1968: The run-down operation carried its final 3 passengers to the Grand Canyon’s South Rim as the Santa Fe Railroad Company began the process of abandoning the service, tracks, and facilities.
Jump ahead again to 1989: Visionaries Max and Thelma Biegert announced a business plan to fulfill their dream of redeveloping the run-down, forgotten line and rehabilitating the historic Fray Hotel and Williams Depot under the business name “Grand Canyon Railway.” (If you plan to go to the Grand Canyon, I highly recommend this mode! In fact, take the “Pullman car” for the most authentic experience! It is a fully-functional, original car and a great throwback to a different era.)
Back to the story: Their plan included spending painstaking years and over 124,000 man-hours restoring four vintage (1906 & 1910) steam locomotives. Their goal was to make sure the experience was as authentic as possible. They even fully restored the telegraph lines and other old-world treasures such as the Pullman coach I mentioned above to create a sort of time capsule for future generations to experience. The buildings and grounds took even more effort, foresight, and at-risk capital to truly bring the project to life.
Nevertheless, as you might expect, the business was a success almost instantly. In fact, by carrying more than 105,000 passengers in 1993, the privately-held business reduced traffic congestion to the South Rim by over 40,000 vehicles that year. By 2007, over 300,000 passengers were being served - further diverting another 10% of annual automobile traffic at the South Rim. The hotel had grown, too, from 22 original rooms to hundreds of beds, a daily wild west show, a 124-space RV Park, a pet resort, a restaurant, a souvenir shop, an indoor pool, and so much more..
I focus on 2007 because that was the year the business was sold to Xanterra Parks and Resorts (the current owner) and that sale event was the culmination of a business dream that seems (to us) to have been a no-brainer. We say, in hindsight, that it was a “no-brainer.” However, the Santa Fe Railroad Company "couldn’t see it,” other business people "didn’t get it,” local governmental bodies "didn’t have the foresight to fight for it." For some reason, only Max and Thelma Biegert had the vision, will, determination, and courage to roll-up their sleeves and build the business to a success.
If you can relate, we applaud you! Everyone has ideas and most have a dream of being independent through owning their own business. But the truth is, not many people take action on their vision. Very few are willing to risk failure. Masses fear personal embarrassment. Some recognize the toll business incubation takes on family time. When you factor in the financial uncertainty of starting a privately-held company, you begin to see that being a successful business owner is special. Many of our clients have amassed decades of wisdom in the entrepreneurial plight just as Max and Thelma did. And that forging process has given them a perspective that few possess. So when you start to think about preserving your legacy, keeping good jobs in your community, and monetizing your business to fund your remaining years - you know you only get one shot to “go out on top.”
Whatever your niche, the business you have built is as unique and desirable as the Grand Canyon Railway & Hotel was to the buyers back in 2007. We believe that every business producing a consistent profit, employing good people, and serving a true need has the same opportunity to sell as a National Historic Place. We also know deeply that the act of preparing a business (and its owner) to be sold for its maximum value is a profession. Therefore, if you find yourself ready to discuss selling your business, we strongly encourage you to seek the counsel of a professional advisor who has walked the path you wish to travel - an advisor who knows the ins and outs of acquisitions. This advisor must be able to help you work through tax, inventory, retained earnings, payables and receivables, employee tenure, real estate, and all the myriad issues that must be considered in valuing a business and negotiating a worthwhile sale. We have seen great companies sell for incredible discounts on fair value due to poor representation, and we have been a part of average businesses selling for huge premiums due to excellent planning, detailed strategy execution, and intensely competitive negotiating. Which seller would you rather be?
Gilbert & Pardue Business Advisors (GaP) is a Houston-based business advisory firm serving lower middle market and middle market business owners from coast to coast through representation for Mergers & Acquisitions (M&A) and through business value-growth services such as Fractional CFO, Advisory Board, Executive Coaching, and Consulting.
Matt Gilbert and Bret Pardue established GaP to provide owners of businesses generally enjoying annual revenue of $5-$75 million with the quality of M&A representation and value-enhancement services previously only available to upper middle and large businesses. GaP brings highly-experienced executives, sophisticated financial and marketing products, proven-effective processes, and fully-integrated expertise to every engagement. No other M&A firm serving the lower middle and middle market provides the quality of representation and transactional expertise that we do.