Deciding to sell a business is never an easy call, especially if we are talking about a very profitable one, such as a gas station. However, when the time comes, you must provide possible buyers with important financial numbers that justify the asking price that has been set.
But when it comes to selling a gas station, there are lots of aspects that must be considered, such as presence of convenience stores, number of gas stations (if you own a franchise), what kind of fuel do you provide and so on.
Those informations must be inside your business valuation, but in order to help you to make the correct valuation, we gathered the most frequently asked questions investors make when they are interested in buying Gas Station and organized them in the next few topics below.
What is your Gas Station business worth?
In order to know how much your gas station is worth you must collect some important information. First, compile your business financial reports, balance sheets, annual reports, sales data and inventory documents. Make sure you have these documents from the past three years at least.
If there are any questions, make sure all the information you’ve compiled answer the following 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 a Gas Station business worth more?
There are also some key factors that improve your business valuation:
- 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
- Clean legal history
- Brand with trademark, copyright or legal concerns
- Documented systems and processes
- Growth potential
But that’s not all. After analyzing your business value with these metrics, you should take a very careful look at the gas station market around you. The main influencer on the profit margins and revenue can be the locations and its correlation with competition.
What does the average Gas Station business sell for?
After analyzing all the acquisitions made in the last 10 years, we gathered a lot of interesting data, and one of them is the average price a gas station is sold for in the United States. If you look at the number of deals made in the industry, the average multiple is 2.18. It is a very good average, and it is correct to say that it represents the majority of the gas station sales.
But in order to understand that, we must understand exactly how to calculate the multiple rate. It’s quite simple: divide your asking price for your business cash flow. The more disparate they are from each other, the higher will be the multiple. And the higher the multiple, better for you..
The average sales price for instance if pretty high: $404.181. The median or the exact middle of all deals made is $235.000, but the most frequent deal is in the $150.000 range.
These numbers are a result from a 10 year-old analysis. Since 2005, the total transaction value was billionaire: $1,303,522.783.
What is the most frequent deal size?
Despite the high average sales price, the most frequent deal size is less than $250k. At least that’s what happens since 2012. One year before sales between $500k and $1 million was the most frequent deal size.
In general, however, it’s possible to say that small gas stations rule the sales. The only thing is when the deal is higher than 1 million, it is usually a huge deal size, once there have been multimillionaire sales in the last few years.
In 2015, deal sizes with less than $250k corresponded to 42% of all deals made.
Is the Gas Station market getting bigger?
As most of the industry, gas station market is at ups and downs. Take a look at the total transaction value from the past years:
Between 2009 and 2011, the total value was much higher than $100 million. After that, however, it had never crossed that mark again. As you can see, 2015 performance was almost the same of 2014’s and quite smaller than 2013.
Economy situation must not be forgotten. When the whole country is facing difficulties, it will probably reflect on the gas station market as well. With the new entrances of cars fueled by renewable energy, that is something that if at scale can danger the whole market.
Are bigger business worth more?
The higher your business, the higher multiple you will get from your sale. As you can see in the chart, as you grow your revenue the multiple goes up and generate a better return. That’s why the average multiple is so high at the same time most of the sales are less than $250k.
In 2015, for an example, the average multiple for that category was 1.34. Sales from $250k up to $500k had 3.15 multiple, while $500k-$1 million had 3.83, $1-2 million had 5.47 and, at last, $2-10 million was 11.77.
In 2014, however, $250k-$500k average multiple was smaller than $0-250k, which also happened in 2012, 2011 and 2010. It looks like a new trend, as 2013 rates were quite similar to 2015’s and 2014 numbers were almost the same as well.
What states have the most Gas Station 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 Virginia or Maryland, you are at the best place possible. But if you are in Washington, New Jersey, Massachusetts, Florida and California you’re closer to a good deal as well.
However, 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 Gas Station 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, especially if you are located in areas where there are no strong competition and a stable and good gas station demand.
What is the process of selling your Gas Station 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 gas station, 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 industry it may likely be a person who already had a store in the field.
Now that you have looked through our report and seen all the possibilities of selling your Gas Station, the first step is to figure how much your business is worth.
Fill out our free valuation form below and receive an audit from our consultants for free! If you have any other questions, please comment or contact us!