When considering the future direction of your RV park, typical options considered are to keep doing what you’re doing, bringing family members into the operation, or passing it down to the next generation. Alternatively, some owners might consider selling. However, one potentially attractive yet often overlooked option is bringing in a partner.
Partnerships and joint ventures can offer a great potential transition option for your goals and your unique personal and family situation. They are most impactful when you can leverage each others’ expertise, capital, energy, bandwidth and innovative ideas. These structures create opportunities for growth, operational efficiency, and mutual success, while allowing you to retain ownership and hang on to the things you still love doing.
In this article, we will look at how a JV partner can help, the benefits for RV park owners, and potential deal structures to make it all work.
1. How a JV Partner Can Help
Bringing in a JV partner introduces fresh perspectives, specialized skills, and financial resources that can elevate your RV park’s performance. Here are some ways a partner can add value:
Operational Expertise
A partner can take over or assist with operational tasks, such as staffing, customer service, sales, marketing, maintenance, and finance. This allows you to focus on strategic decisions, offload things that you can’t or don’t want to do anymore, or simply enjoy a lighter workload if you are planning a transition into a full or partial retirement.
Fresh Ideas and Innovations
Partners often bring innovative strategies to the table—introducing new amenities, optimizing pricing models, or implementing cutting-edge marketing campaigns to attract more guests and increase revenue.
Access to Capital
Whether it’s for upgrades, expansions, or operational needs, a partner can provide the necessary financial backing. They might also help secure favorable financing terms or fund capital improvements.
Improved Decision-Making
Collaborating with a partner can lead to better decisions by combining expertise and aligning on a shared vision. Regular progress checks ensure both parties stay focused on agreed goals.
Facilitating Partner Buyouts
If you share ownership with others but want to simplify the structure, a JV partner can step in to buy out existing partners. This not only resolves complex ownership arrangements but also provides you with a fresh start to build a streamlined and aligned operation.
Transitioning You into Partial or Full Retirement
For park owners who are not ready to sell outright but wish to step back, a JV partner offers the ideal solution. You can transition into a lighter workload while staying involved in decision-making. A partner can take over specific operational duties, allowing you to enjoy semi-retirement without relinquishing control or severing your connection to the business.
2. Benefits to RV Park Owners
Teaming up with the right JV partner creates a win-win situation. Here’s what RV park owners stand to gain:
A Succession Plan Without Family Involvement
If a) you can’t or don’t want to keep running the park the way you have been, b) you don’t have family members ready to step into the business, and c) you don’t want to sell, a JV partner can serve as a successor who shares your vision and values. They can eventually take on a larger ownership role, providing continuity and preserving the legacy of your RV park.
Stay Involved in the Business & Decision Making
If you’re not ready to let go completely, a JV partner provides the flexibility to remain engaged at a level that suits your lifestyle and goals. You can focus on on what you like and do best and leave everything else to someone you can trust. Partnerships can allow you to stay connected to your business without bearing the full burden of daily operations. You remain part of the decision-making process while delegating specific responsibilities.
Collaborative, Competent Partnership
Partnering with a collaborative and hard-working individual brings a dynamic force to your business. Such a partner not only takes over key responsibilities but does so with the skills, dedication, and passion needed to elevate operations. Their focused efforts ensure that critical tasks are handled with precision and care, driving success while freeing you to focus on the aspects of the business you enjoy or transitioning to a lighter workload. By leveraging their expertise and commitment, you can rest assured that your RV park is in capable hands, poised for growth and sustained excellence.
Unlock New Profit Potential
With a partner’s resources and fresh perspective, you can implement growth initiatives that might not have been possible otherwise. This creates opportunities for additional income and enhanced profitability. By pooling your resources and expertise, partnerships can unlock new revenue streams through innovative ideas, improved amenities, and enhanced marketing.
Risk Mitigation
Entering into a partnership allows you to distribute both the financial and operational risks associated with running your RV park. By sharing ownership with a dedicated partner, you not only reduce your personal financial exposure but also gain a collaborator whose interests are aligned with the long-term success of the business. This shared responsibility creates a solid foundation for growth, ensuring that risks are managed effectively while fostering mutual accountability.
Flexibility and Control
Strategic deal structures can be tailored to let you retain significant control over key decisions, such as approving major capital expenditures, changes to the business plan, or decisions about selling the property. This flexibility ensures your original vision for the RV park remains intact while benefiting from the partner’s contributions. You can shape the partnership to provide support in areas you need most while safeguarding the aspects of the business you hold dear.
Enhanced Guest Experience
A well-structured partnership often unlocks opportunities to enhance the guest experience by introducing upgraded facilities, new amenities, and improved customer service. With the partner bringing in fresh ideas and resources, your park can become a destination that stands out from the competition. The resulting improvements attract loyal guests, generate glowing reviews, and build a stronger reputation, ensuring long-term success and profitability.
3. Potential Deal Structures
Joint venture agreements can be tailored to suit the unique needs of both parties. There are an unlimited number of ways for the ways it can be structured and the terms that can be included. Here are several deal structures, along with key terms to consider:
Minority Stake for Operational Help
- Structure: Partner receives a 10–25% ownership stake in exchange for operational involvement.
- Key Terms: Use a vesting schedule tied to operational milestones, ensuring the partner earns their equity.
Minority Purchase and Sale
- Structure: Partner acquires a 10–49% stake at an agreed valuation.
- Key Terms: Negotiate a call option allowing you to buy out the partner if the arrangement doesn’t work or if the partner is not delivering on what was agreed.
Equal Partnership
- Structure: Partner acquires a 50% stake.
- Key Terms: Establish a unanimous shareholder agreement requiring joint approval for major decisions, such as an annual business plan, capital improvements to make, capital injections required, obtaining a mortgage or deciding to sell.
Majority Purchase and Sale
- Structure: Partner acquires a 51–90% stake, granting them more operational control.
- Key Terms: Include a call option if certain things aren’t working or if agreements are not being met as well as a unanimous shareholder agreement to protect your interests and ensure you can keep control of how the park is run and how things get done.
Phased Buyout
- Structure: The partner buys incremental ownership stakes over time, providing flexibility for both parties. This approach allows the park owner to maintain flexibility while rewarding the partner for performance and growth, ensuring alignment of interests throughout the process.
- Examples:
- Timeline-Based Buyout: The partner purchases 20% ownership each year for 2-4 years, ensuring a gradual transition of control.
- Milestone-Based Buyout: Ownership stakes are tied to performance milestones, such as the partner acquiring an additional stake if the park’s NOI grows by a certain percentage.
- Valuation-Based Buyout: The partner buys their first 20% at an agreed upon valuation (say $3 million) and has the option to purchase an additional 20% at a higher valuation (say $3.5 million) anytime within the next number of years (say 2-4 years).
- Key Terms: Define clear milestones or valuation tiers to ensure mutual agreement on each phase.
Conclusion
Joint ventures and partnerships offer an ideal solution when you know it’s time to make a change, but you don’t have anyone to bring into the business and aren’t ready to sell. A well-structured partnership allows you to transition into a lighter workload (if desired) while retaining ownership and involvement in the park. By bringing in a collaborative, skilled partner, you can delegate specific tasks, benefit from fresh ideas, and share responsibilities without giving up ful control.
This approach lets you remain connected to your business and its success while reducing stress and creating an opportunity for personal freedom, all without the need to sell or fully step away. Whether you seek operational support, growth opportunities, or simply a way to ease into retirement, a partnership can be the perfect balance.