Towing businesses are essential in the needs of the communities in the U.S, which in turn can turn out to be a very profitable business. Towing companies offer services for towing broken down cards, removing cars from the scene of an accident, or even illegally parked cars to name a few. When a towing company is started, there is the possibility of starting with one tow truck, but as your business becomes larger and you purchase more trucks, you are able to bring on more clients, such as apartments, business owners or even government offices.
After you have added more trucks to your fleet, and your business is starting to make money without you barely having a stress about it, you have possibly wondered about selling your business, and wonder, “What is my towing business worth?”. A broker can help you find the answer to that question, but understanding the process is always beneficial to you as an owner. After all, your objective is to receive the maximum value for it, and in order to do that, you must first look at the many variables that come into consideration when looking at the possibility of selling your towing business.
We have taken data from the last decade of towing companies sold in the United States, that met our criteria and compiled it, in order to show you the different variables. But in order to make sure you have all the necessary information to make an informed decision, we have broken it down further for your review.
What is your towing business worth?
The value of your towing business is correlative to your individual business, the market and what potential buyers are willing to pay. So when trying to figure out how much your center is worth, take a look at the following questions and jot down the answers to help further the valuation process of your business.
- 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 center on the owner?
- What systems and processes are in place to run the center?
What makes a towing business worth more?
When a buyer looks at purchasing your center, they are basically looking at their rate of return on their investment. So when will they recover what they have spent on the center? In order to show the prospective buyer that their ROI will be high and their relative risk will be low, you should have the a few key characteristics associated with your towing business.
And while it is true that the profit and sales are considered very important aspects when considering to purchase a center, they are not the only factors that can add or decrease value the value of your center. The following characteristics will give your center better value.
- 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
What does the average towing business sell for?
Looking at the graph, the broken down the data that we analyzed, which consisted of centers that range in the $50 thousand to the $10 million valuation range. And these centers can sell for as much as billions of dollars or as little as a few thousand. You can clearly see the average of towing business sold in the last year in the United States is at 2.59 times earnings, with the average sale price coming in at $595,095.22. However, to have a clear understanding you also have to look at the median sale at $385,000.00 and the most frequent sale was at $150,000.00, which play as a factor in your valuation. All this information is a bit overwhelming without being broken down, so later in this article, we will break down these numbers and give you the information needed to be able to start the selling process.
What is the most frequent deal size?
Since we live in an economy that has a market that fluctuates on a daily basis, pinpointing the exact answer to this question, is not as easy as it seems. However, looking at the data collected, the most frequently sized deal is tied between the $0-250k and $250-$500k ranges. Throughout the last decade there has been consistent sales in both of these price ranges. But no need to worry if your center does not fall into either of those valuation ranges, there is a buyer for every center, finding that buyer is the key. And in order to find that buyer, we suggest finding the right broker to help.
Is the towing business market getting bigger?
There will always be fluctuations in the market and trends. Towing businesses are essential in the removal of vehicles that have no other way of being removed.. But regardless of the fluctuations, being able to keep your center stable during those times will give future buyers the assurance that your towing business is a good investment and buy.
Are bigger companies worth more?
Generally speaking, yes, the bigger your center is, the more that it is worth. Take a look at the image below, as there is an increase in revenue, your multiple becomes higher, which helps generate a better return on your personal investment.
To help you understand the graph a little better, look at the multiple from 2015 for the valuation price range of $0-250k range, here the average multiple lands right at 0.9, with a total of 1 towing business sold, however when you look at the $2-10 million range in 2015 your multiple jumps to 3.5 with 1 towing business sold. Looking at this data, there is a clear answer in this case, that yes larger centeres are worth more.
What states have the most towing 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? Florida and California hold the most amount of towing businesses sold, with 9 in each state sold. But having a center in a smaller state with less sales does not mean that someone isn’t looking to start a business venture in your neck of the woods. Having a broker to help you find a buyer for your towing business no matter what state you are in, can help you successfully sell your center.
Why would you sell in the first place?
When deciding to sell your center, it can become an overwhelming and difficult decision. Your reasons will always be different from the towing company owner down the road. Maybe you are ready to retire, or you are ready to move on to a few venture. Whatever your reason is, be sure that you have the necessary knowledge and tools to get the value out of your center that you are looking for.
How long will it take to sell your towing business?
There is not one set timeline for the sale of any business. The variables of the individual center and terms of the sale will define how long it will take to sell. Do keep in mind that generally speaking, the larger the deal (over $1 million) take longer to sell, over the smaller deal (under $200k) because of the complexity of the center, in addition to the risk of purchasing a company that large for the buyer. And try to remember, that your individual center will always sell at a different pace than other towing business, and being patient is an essential part in selling.
What is the process of selling your towing company?
Our step by step process will help you become more confident, when you decide to sell your towing business. Many business owners forget or overlook essential steps in the selling process and sometimes become confused and lost throughout the process. Doing each and everyone one of these steps will help guide you to the maximum profit of the sale of your center. If you have questions or concerns about your businesses’ value or the process in itself please contact us and we will be happy to help.
Who will buy your center?
Finding a buyer can be frustrating and feel like a never ending search, but finding one is essential for the sale of your center. There are many options and possibilities when it comes to buyers for your company, buyers can range from first time buyers, experienced entrepreneurs, or private equity companies. No matter what the size or maturity of your center there is a buyer for your center, and we can help you find them.
After reading this article and understanding the necessary steps and processes that come along with the sale of your towing business, and you’ve decided that selling your center is the right decision, we encourage you to have your towing business valuated by a professional broker, this will ensure that you are receiving maximum value for your business. We understand that your towing business is your baby, and we always keep that in mind, when valuing your center. So when trying to answer that question of what is your business worth, comparing it to the in the next town over, will not get you the exact answers you seek. When you are ready to take the first step, we will be more than happy to help you find the true value of your center, and can help accelerate the sale, by helping you find the right buyer as well. Feel free to fill out our valuation form and get started right away.