It’s not an easy task to run an automotive dealer. When you own a business like that you have to be always in contact with car manufacturers, deal with security protocol, staff management and so on.
If you are thinking of selling your business, you are probably asking yourself: how much is it worth? You may be having sky-high profits; you may have the most beautiful cash flow ever. But beyond that, you need to assess other aspects before answering that question.
What is your Automotive Business worth?
First of all, take a pencil and write all your business numbers down. But which numbers? Sales, profits, growth rate, and your business position in the market are some examples.
Then make a brief analysis of the moment your business segment is at right now. What are the main reasons why people buy cars from you? How do they come to your business? What practices have you adopted to ensure its sustainable development? How does the business model usually work?
Check out these metrics and make sure you have all the information potential buyers require:
- 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?
If you get all of these aspects right, you will know exactly how much your business is worth.
What makes a Business worth more?
A business is worth more not only when the profits are high, but also when the segment momentum is good.
In the automotive industry, the country’s financial situation is an important parameter that should be taken into consideration. When there’s an economic crisis, people tend to go for used cars, which takes new cars sales into a fall.
High taxes, credits restrictions and poor prospects for improvement in the economy are the main factors why people usually rethink their spending and choose cheaper cars. These changes tend to make automotive dealers sales decrease, and profits tend to fall as well.
But that’s not all: your business image and everything you take to improve it also make a difference. How come?
If you have loyal customers, if you have no judicial problems, if your business financial management is doing fine and at with growth potential, if the customers come from different places, all this can help your business to worth more.
What does the average Auto Business Sell for?
In the last ten years, the average sales price among automotive dealers is close to $1 million.
Totally, there have been 144 automotive dealers sales. Average multiple is 3.35, which means the average asking price is more than three times bigger than total gross income.
What is the most frequent deal size?
But it’s not the most frequent deal size. With the same analysis, you are able to identify how much has been negotiated in the segment over the last few years. It does not mean that you should sell your business for that price exactly, but it helps you to have an idea of how the segment is being recognized by your potential buyers.
In the automotive dealer business, the most frequent deal size is at $2 million.
Is the Automotive market getting bigger?
Is the automotive dealers segment growing? This is an answer that you need to know. Analyzing the total deal size year by year. Check it out:
It’s important to say, though, that 2015 numbers are not completed. The data is available only until October. But, in general terms, we can see that automotive dealers business is at ups and downs, but hardly 2015 performance will be better than 2014’s.
Are bigger businesses worth more?
The deal size varies according to the financial situation of your business. Generally, the larger the business, the more it is worth, but that’s not necessarily a rule.
Let’s say, for an example that a business was sold for $200.000. On average that would mean that it’s yearly profit is bigger than a business sold for $100.000.
What states have the most business deals?
Are you wondering where the most deals were made throughout the country, or if your state has a hot market to sell fast? As you can see if you are located in California, Texas or Florida, you may get a lot more offers than if you are in Utah or Maryland. But sometimes you can overcome the low number of deals with investors or competitors looking to enter a specific new area, and get lucky with an offer!
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 Automotive Dealers, 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 automotive industry it may likely be a person who already had a store in the field.
If you are looking for the perfect time to sell your business, forget it. It does not exist, especially when you are not selling because you want to, but because you need to, or when someone makes you an irresistible offer. But you should take the growth rate into consideration. If its growth is stable and healthy, then the best thing to do is to sell it before the situation gets worse.
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!