In the United States, there are more than 260 million registered vehicles, including cars, motorcycles, trucks, buses, and so on. Most of them, of course, are passenger vehicles, according to United States Department of Transportation.
So you can imagine how many automobile repair shops must be all over the US.
Two things you can be sure of: if you own a business like that, it is very likely you’ll always have customers, but on the other hand competiti on is an everyday challenge. For someone to have a successful auto repair, he has to know how to avoid all odds.
In order to sell it, some expertise is also required, but in this case the owner must know how to sell his business for maximum value. We know it’s not an easy task, so we prepared this article so you can learn how to do it.
What is your Auto Repair business worth?
If you own an automobile repair shop and have decided to sell it, there are two mainly things you should be aware of before setting your asking price.
The first one is the most you gather of finance information the higher your chances will be to sell your business for a good buyer. The second is regarding location. Make sure you know exactly how competition works around you, so potential buyers can be aware of the difficulties they may find.
Take a look at these metrics. Make sure you are able to provide people with all these answers:
- What are the sales?
- What is the profit?
- What are the growth trends?
- What is driving new sales and is that sustainable?
- What channels do new customers come from and what is the breakdown of each channel?
- What is your market position?
- Is your Location favorable?
- How reliant is the business on the owner?
- What systems and processes are in place to run the business?
What makes an Auto Repair business worth more?
There are a couple of aspects that improve your business value a lot. If your automobile repair shop has some up to date auto mechanics, brand new equipment or even contact with exclusive and innovative distributors, for instance, you may have greater chances to make a deal. However that’s not all.
Your growth potential, a clean legal history and documented processes and systems are differentials that also must be considered. Take a look at these metrics too:
- Predictable key drivers of new sales
- Stable or growing traffic from diversified sources
- Established suppliers of inventory with backup suppliers in place
- Traffic stats
- High percentage of repeat visitors and repeat sales
- Brand with trademark, copyright or legal concerns
What does the average Auto Repair sell for?
Since 2005, 1.726 automobile repair shops were sold. The total transaction value for this period is stunning: more than $600 million, with an average sales price of more than $359k.
As you can see in the chart, selling this kind of business may be a very profitable decision too. If you sell it today you may get a multiple of 2.20, which means asking price tend to be three times higher than total gross income.
What is the most frequent deal size?
Although the average sales price is up to $300k, the most frequent deal size is $150k. It can be confirmed if you take a look at this other chart: most of deal size were less than $250k, but there’s a good number of businesses sold for more than $250k and less than $1 million in the past five years.
The bigger the business the higher the multiple and the profit as well.
Is the Auto Repair market getting bigger?
The auto repair, parts and services market is stable. Last year, total transaction value was $73 million, in 2014 it was $62 million and in 2013, $71 million.
2015 wasn’t the best year for business like this, but it’s still a good moment to sell your automobile repair shop.
Are bigger businesses worth more?
In general, that’s what happens. In 2015, for instance, businesses sold for less than $250k had a multiple of 1.80, while the ones which were sold for more than $250k and less than $500k had a multiple of 4.15.
However deal sizes higher than $500k and lower than $2 million had multiples smaller, between 3.2 to 3.8.
What states have the most business deals?
California, Florida, Texas and Illinois are the best states for you to sell your automobile repair shop.
Other states like like Arizona, Columbia, North Carolina, New Jersey, New York and Virginia had also good numbers.
Why would you sell in the first place?
The reason to sell always varies from each person. Maybe you are looking for new challenges, businesses and opportunities, or you just want to enjoy your family and retire. Although it can seem tempting to get your hard worked cash, make sure that you are clear on the motives so you don’t regret afterwards.
How long will it take to sell your business?
If you have read all the necessary steps to understand your valuation, and think you have focused on all the topics that make your company worth more, it is maybe time to start the process. Selling your business is a long-term process, and doesn’t happen overnight. Usually companies sell in 12 months, but you can also see deals getting closed in 6 to 9 months depending on the opportunity.
What is the process of selling your business?
This step by step process will help you get less confused when you make sure you are ready and confident to let go of your business, and perform a nice and positive sell. Many entrepreneurs forget about a step, or just don’t have the right guidance to know all the stages necessary and get lost through the process. Don’t forget to go through all of these, and if you have any questions, comment at the end of the article or contact us for more help.
Who will buy your business?
If you are wondering about the buyers that can be interested in your Auto Repair, Parts and Services, don’t worry, there are many options and possibilities. From First Time entrepreneurs, to businessmen interested in new opportunities, the chances are that in the automobile repair industry it may likely be a person who already had a store in the field.
There are more than 260 million registered vehicles in the United States, most of them are cars. So it’s not difficult to say that automobile repair shops are very popular among people, and it’s reflected in numbers.
If you decide to sell your business today you’ll probably get a good profit for it, with an average multiple of 2.2.
If you want to start accelerating your buyout process, fill out our free valuation form and get your business valued today! Leave your comments on any doubts or feedback, we are glad to hear your thoughts!