NOC forges ahead with new ownership teamWritten by Becky Johnson
A group of new owners has taken the reins of Nantahala Outdoor Center, a generational milestone for the outfitter that has grown from a small fleet of rafts in the early 1970s to a diversified multi-million operation under the leadership of its two founders.
The recent sale has transferred majority control to a new group of owners — six businessmen from the Atlanta area who are merging their love of outdoor recreation with their business and investment acumen. One of those investors is NOC’s own Sutton Bacon, who has been the CEO for five years.
“All the investors including myself have young children and want to expose their own families to the outdoor lifestyle,” Bacon said. “It is a terribly exciting time. We see NOC as being uniquely positioned to reconnect American families to the outdoors.”
Forty years ago, it would have been a long shot to predict the scrappy operation launched by a couple of river rats would spawn a booming whitewater industry in Western North Carolina and catapult the Nantahala into an international paddling destination.
The storied legacy of those founders, Horace Holden and Payson and Aurelia Kennedy, will continue at NOC. They will retain partial but now minority ownership of NOC and keep their seats on the company’s board of directors.
While they plan to stick around and see that their founding philosophy and vision for NOC lives on, they are now entering their 80s and were ready to take a step back.
As NOC celebrates its 40th anniversary this year, the new owners plan on being around for the next 40, Bacon said.
“There is no divestment prospect. We aren’t thinking ‘let’s shape the company up and sell it in seven years for more than we bought it for,’” Bacon said. “This is a long-term hold.”
Bacon deserves credit for brokering the deal. He tapped old friends from the Atlanta business circles he once traveled in as a management consultant. Those friends in turn brought a couple more to the table, ultimately amassing a group of six like-minded investors.
The identity of all the investors isn’t public for now, but Bacon ticked off a quick list of their business backgrounds and expertise. Their collective resumes include investment banking, law, private equity, marketing and real estate experts.
As a true test of their mettle, the investors spent a week at NOC last year going through raft guide training school, getting wet and learning first hand what the frontline of NOC is all about.
By all accounts, the investors weren’t the only ones doing their due diligence during the year-long courtship. Likewise, the Kennedys and Holdens, intent on finding suitors who shared their philosophy, were sizing up the investors.
“The company intentionally wanted to bring on values-aligned investors,” Bacon said. “We wanted people to invest in the company, not just buy the company. I think our founders wanted to preserve their legacy and their heritage.”
The match is probably as good as it gets: businessmen willing and able to personally invest millions of dollars in a river outfitter don’t come along every day, especially ones who are philosophically vested in what NOC is all about.
NOC promotes individualism and the lifestyle of “work hard, play hard,” Bacon said.
For Bacon, his increased ownership share along with his continued role as CEO brings a lifelong passion full-circle. Before he was even big enough to lift his own kayak on top of the car, Bacon made regular weekend pilgrimages from Atlanta to kayak on the Nantahala thanks to an indulgent mother.
“NOC was my absolute favorite place on the entire earth,” Bacon said.
That drove him to cash in the big-city life and fast-paced business climate of Atlanta for life in Western North Carolina and a chance to steer the place he idolized as a child.
“It is an emotional connection I have had since a child,” Bacon said. “It was a very deliberate decision. It is a lifestyle.”
ESOP now NOC history
The new investors mark another type of transition for NOC: it will no longer be largely employee-owned.
Money put up by the investors allowed NOC to buy out the remnants of an employee stock plan the company had operated under for three decades.
The ESOP (employee stock ownership plan) had once been a hallmark of NOC.
“The company founders had a vision of employee participation in the company’s success from the very beginning,” Bacon said.
It was economically advantageous, but it had a larger social purpose.
“To foster a sense of esprit de corps, so staff would go the extra mile,” Bacon said.
For years, NOC wore its employee-owned status as a badge of honor.
“‘Employee-owned company’ was on all its letterhead and stationary,” Bacon said. “It was a significant cultural piece of NOC. It was something NOC was known for.”
But, NOC began phasing out the ESOP around 2002 when new legal and reporting requirements were imposed in the wake of Enron and Worldcom scandals.
“Regulations became extremely onerous,” Bacon said, and costly to administer.
While no new employees could buy in, those who already owned company shares through the ESOP remained on the books. At the height of participation, several hundred employees were enrolled in the ESOP and accounted for two-thirds of the company’s ownership. But recently the numbers had dwindled to just 60, most whom didn’t even work at NOC anymore.
“It no longer served its intended social or economic purpose,” Bacon said. “It was literally just costing the company money to keep the plan going. It was significant.”
At the time of the recent buyout, employee-owned stock accounted for about one-third of the company’s total ownership. Of those who still owned NOC stock, some receive a “significant” pay out, Bacon said.
“It has been a fantastic investment,” Bacon said of the ESOP. “It has outpaced in many years the stock market.”
NOC has 200 year-round full-time employees, but that swells to as many as 900 during peak season.
Of its huge seasonal workforce, about half are purely transient, mostly college students looking for summer jobs.
But, NOC also enjoys a core base of regular seasonal workers who return year after year, with just a three- to four-month hiatus in the winter.
“They are reliable and consistent and awesome and what makes NOC NOC,” Bacon said of their returning seasonal workers. “Even without the ESOP, NOC’s unique guest-centric culture will continue.”
NOC looks ahead to another 40 years
Nantahala Outdoor Center plans to build new on-site lodging on their campus in the Nantahala Gorge, thanks to working capital put up by a new team of investors.
Plans are still in the very early stages and will be developed during the coming year as part of a forward-looking strategic development process. The move will help NOC position itself as a full-service tourism destination and diversify its market.
NOC owns 450 acres on the river, but the footprint of its campus is only about 60 acres currently.
“We have a significant development opportunity. We are not landlocked in any way,” CEO Sutton Bacon said, despite otherwise being surrounded by national forest service land in Swain County.
NOC currently has lodging for about 200 people in bunkhouse style accommodations and mid-scale hotel rooms. The additional lodging will help NOC cater to a new demographic of tourist.
NOC also plans to invigorate its outdoor adventure line, not only in its traditional paddling arena but also in mountain biking, fly-fishing, outdoor photography, wilderness skills and other areas. NOC has already made forays into these new offerings over the past decade and plans to further ramp up its offerings as an outfitter of all things outdoors.
In the same vein, NOC will re-launch a line of guided international adventure travel excursions.
NOC has also seen success in two new outdoor retail storefronts, one in Gatlinburg and one in Asheville inside the Grove Park Inn, where guests can shop for outdoor gear and apparel as well as book outdoor adventure trips. NOC plans to capitalize on its well-known brand to augment the retail sector.
The company plans to bring in a consultant to help lead brainstorming sessions as it develops plans to carry NOC into the future.
“These are the things we know are going to be on the list, but there will probably be others,” Bacon said.