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  Home > Discussions > Auto Repair Shops: How Do You Determine A Realistic Price?

Blog Post Auto Repair Shops: How Do You Determine A Realistic Price?

Initiated By: Spencer Siegel: BBN Facilitator at 925-701-8064 X315, 925-784-6747 (Cell) - Log In To Message/Email This Contributor

Comments & Replies: 1   Topics: business valuation, buying a business, due diligence, for sale by owner, selling a business

Discussion Description: How do you get an accurate valuation on an auto repair business? While advising several sellers and buyers of auto repair shops, several key factors seem to keep working in the value equation of the auto repair businesses being purchased or sold. BBN Manager Spencer Siegel leads this discussion.

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The price for an auto repair shop should be based upon several factors, some being more influential than others. Financials such as net sales, gross profit, EBIT, and EBITDA can be used along with industry-median valuation multiple to find an appropriate selling price for an auto repair business.

These valuation multiples are not static though and can be different depending on certain criteria. If sales are over $1,000,000 than the calculated price should be raised to reflect that larger size, the same goes for an SDE (Sellers Discretionary Expenses) over $200,000.

Along with using financials, an auto repair shop's price should be based on other types of factors, including current employees and management, lease, utilization of software, client data, scope of owner's role, business ratings, equipment condition/depreciation, number of service bays, franchise or not, and what services are provided. Usually the larger the size of these factors, the higher the calculated price of the auto repair shop should be. Along with these factors, inventory is important to consider to when pricing an auto repair shop: where shops with inventory that is less than 10% of the calculated price, probably should include the inventory with that price estimate, but if inventory is larger than 10% of calculated price than the calculated price, then the total selling price should be calculated price plus inventory.

Lastly its important to consider the type of customers the auto shop works with and the type of services the shop does: an auto repair shop with fleet and commercial customers should have its price calculated with higher multiples than the median ones previously stated; the same goes for shops that do heavy line work.

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Contact: Spencer Siegel at 925-701-8064 X315, 925-784-6747 (Cell)   Log In To Message/Email This Contributor
Profile: I have worked with business buyers, owner/sellers, agents, brokers & advisors on BizBenNetworks sister website for the last 5 years as a facilitator, moderator, and optimizer of postings and website content. Let me assist you with achieving success in either selling or buying a business.
Key Words: spencer siegel, bbn, facilitator, bbn facilitator
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