As private equity companies aggressively explore the outdoor industry, a trio of investor-backed Colorado outdoor business leaders are launching a new option for owners and employees hoping to grow their brands in the booming sector.
“For some reason, this has never been done in outdoor recreation. And it’s time,” said Bryan Wachs, a Grand Junction entrepreneur who is behind the new Outdoor Rec Collective, which is building a holding company with a diverse collection of employee-owned outdoor recreation businesses.
The Outdoor Rec Collective partners include Gary Montes de Oca, the former head of development and strategy at Christy Sports who played a critical role in the expansion of Alterra Mountain Co., and Stephen Barnes, who developed products and brand strategies for outdoor companies like Osprey Packs, The North Face, Sierra Designs and Mammut.
From left to right: Bryan Wachs, Stephen Barnes and Gary Montes de Oca are partners in the new Outdoor Rec Collective, a holding company for employee-owned businesses. (Courtesy photos)
The idea is that the collective will buy majority ownership of outdoor companies from legacy owners and founders and help the brand navigate the transition to employee ownership without those employees paying anything. The investors would get their returns in future years as the employee-owned businesses thrive. Eventually — likely less than a decade — the employees will have 100% ownership of the company. (A growing body of research shows employee-owned businesses tend to be more profitable and sustainable through economic downturns.)
“We are talking to several brands right now,” said Wachs, noting that “every negotiation is very different. We have investors who are focused on impact investing for employee ownership, which, in our opinion, is overdue in the outdoor recreation industry.”
Employee ownership holding companies are not new. There are hundreds of thousands of employee owners in retail, grocery, landscaping and manufacturing industries across the U.S. The Outdoor Rec Collective model is new for the growing outdoor recreation industry, where particularly passionate consumers and business owners drive a $1.2 trillion outdoor economy.
That exploding outdoor recreation sector — with 5 million workers — makes up 2.3% of the overall U.S. economy, making it larger than agriculture, mining and utilities. And that is attracting big private equity investors.
Wachs, who created the innovative QuikrStuff bike rack, thinks institutional investment strategies are not the best fit for all outdoor business owners and their workers. Those big firms are hunting for deals and focused on quick profits. Employee ownership — facilitated by a holding company controlled by working owners who are likely to prefer higher wages in mountain town communities over, say, quarterly returns for remote investors — can be a more sustainable model for outdoor businesses, he said.
“There is a nervousness and anxiety right now throughout the outdoor recreation industry because of the tariffs or the economy or the low snow year. We want to offer both the business owners and their workers a way to ease that anxiety,” Wachs said. “We have the money and lots of it. We have investors who see this as a really important step for the outdoor industry.”
For example, maybe the collective can acquire a winter sports company and a backpacking company. In a low snow year, declining revenues for the winter company could be offset by the summer company.
Employee ownership is a growing trend nationally. Workers at employee-owned companies have 92% greater household wealth than workers who do not have any ownership in their company, said Loren Rodgers, the executive director of the National Center for Employee Ownership.
“It can be a pretty powerful tool from an employee perspective, and that is a large motivator for sellers who see their employees as the main driver of their success,” Rodgers said. “It really seems like a good fit for the outdoor recreation industry, which is very focused on employees being good ambassadors for the company.”
Rodgers said the employee-owned holding company is an idea that is becoming more popular as private equity expands into new industries like health care. His organization, which was created in 1981 and now represents 2,800 members, is seeing more holding companies that often acquire new employee-owned businesses with wide-ranging diversity.
One of his member holding companies owns a newspaper, an ambulance service and an RV manufacturer. Another makes music for advertising, digs and buries data cables and sells fabrics.
“Acquiring by holding companies is a big growth sector right now,” Rodgers said.
Conor Hall, the head of the Colorado outdoor recreation office, said an employee-owned collective is “a good sign for the outdoor industry.”
“It shows that the industry is maturing as we have different capital structures at play,” Hall said. “In some cases, private equity and venture capital work well. In some cases, employee ownership works well. A healthy, vibrant industry has a lot of options for capital investment.”
Gov. Jared Polis created the Colorado Employee Ownership Office in 2020 as a resource for the state’s 230 employee-owned companies and to help urban and rural business owners transition to worker ownership. The impetus for the office came from surveys showing nearly half of the state’s small business owners are older than 55 and that about 60% of business owners planning to retire or sell in the next decade.
The state office last year started offering tax credits up to $50,000 a year to offset the costs of selling a business to employees.
Hall said the Outdoor Rec Collective could help “spread the wealth around” in mountain towns where the cost of living challenges not just workers but business owners.
“I’m really excited to see a structure that spreads the success and motivates and inspires employees with real ownership and real wealth,” he said. “That is one of the best things we can do in this environment where the cost of housing continues to increase. We need things that can generate real wealth for employees. I think this can be great for Colorado and great for our industry.”