Selling without shameFormer owners of the historic Fairfield Inn want to erase stigma of auctioning a business
When Sal Chandon and his wife, Joan, put the historic Fairfield Inn up for auction, reactions made it clear many assumed the business was in trouble.
"We buy businesses and real estate pretty much with the idea of selling it," Chandon said. "There's nothing wrong with that."
In this case, he said, when they bought the inn in 2002, they figured they'd probably be ready to move on into semi-retirement in 10 to 12 years, as their daughter — who does not want to run the inn — reached the end of high school.
This is the early end of the spectrum, but the Chandons want to visit colleges with their daughter — and, with an eye to real estate investing, they'd like to take advantage of market conditions now to flip or rent houses.
The Chandons have used real estate agents for their past business ventures and say they provide "an extremely valuable service," but this time they decided to auction the business on a turn-key basis: Passing the inn wholesale into the hands of the next owner.
"I'm certain it would have taken 12 to 24 months to sell the place with a traditional listing," said Chandon. "We weren't willing to do that. We wanted to move onto our next business ventures on our time frame."
So they contacted Annville Township-based Fortna Auctioneers & Marketing Group, and on Nov. 3 had an auction at which Katherine Bigler and John Kramb submitted the high bid of $700,000. The whole process took about six months.
Fortna has done about 15 business auctions all told, according to president Michael A. Fortna. The Chandons noted one of those auctions in particular when making their decision — the Londonderry Inn of South Londonderry Township, which, like the Fairfield, is historic and highly visible.
Fortna said he stressed the uniqueness of the inn in publicizing the auction: The Fairfield dates to 1757, is located near Gettysburg, boasts being one of the oldest continuously operated inns in the nation — and it has a restaurant.
The Chandons put a lot of work into the inn, Fortna said, and had 10 years of business growth, favorable projections and lots of bookings for next year to show for it. However, he notes, before prospective bidders can see financial paperwork in business auctions, they have to sign nondisclosure agreements.
Part of ensuring a successful business auction is making sure the news gets to the right buyers — something not all auctioneers are prepared to do, Fortna said. In some cases, it also involves making sure the owners understand the emotional import of what they're about to do.
"It's not only a property, it's a life," Fortna said.
While some owners, like the Chandons, relish the abbreviated timeframe auctions offer, others find it hard to so quickly step away.
On the other hand, Fortna said, while some owners seeking to sell a business through conventional means may struggle to know how to price it, an auction "shows the seller what the market is willing to bear" — and whereas conventional prospects may make low offers, at auction "people tend to bid their highest that they can possibly bid before they drop out."
"We know we could have sold the place for more money," Chandon said. But given their objectives, they're happy with the result.
And they're not leaving immediately: Closure is still a few details away, and they're going to stay for a couple of months to show the new owners how to run the place, which has a dozen other employees.
Bigler and Kramb own the nearby Adams County Winery, and they envision synergistic interactions between it and the inn. They've never run an inn before — but then, Kramb said, when they bought the winery 14 years ago, they had never operated one of those, either.
Kramb, who wasn't at the auction with Bigler, said the fact that the sale was by auction "wasn't even a consideration" in their decision to pursue purchasing the inn.
"It's just exciting to own a piece of history," Kramb said.
He and Bigler have some ideas for the place, he said, but they also think the Chandons did a "remarkable" job with the inn, and for now they're focusing on learning from them.