Overview
There are far more buyers than sellers in today's car repair market because of the large number of retired or downsized baby boomers looking to acquire businesses. These buyers have the funds and experience to make them well qualified auto shop purchasers. This has caused the price of good businesses to go up, not down like you might think in a recession. A properly executed marketing strategy can create a competitive bidding environment to sell your company for top dollar.
Problem Encountered
The owner of a stable, 7 year auto repair company that serviced new car dealers asked us to assist him in selling his business in the fall of 2008. After performing an Opinion of Value, our client was thrilled to learn how much his business was worth. Shortly after listing the business, new car sales plummeted to levels so dramatically low that the client's monthly car repair revenue dropped to virtually zero, rendering the business basically worthless.
OUR CURRENT LISTINGS - Texas Auto Repair Shops for Sale
Our Solution
Slowly our client began generating new revenue sources from used car dealerships. Still, the prospects for selling the business were dismal. During this time we began to investigate what the future might hold for this auto repair shop and determined that significant growth opportunity existed as there was no competition providing this service to used car dealers. We prepared a detailed proforma supported by industry statistics to present to potential purchasers and began a serious marketing campaign to present the business as a value added opportunity.
Results
Within a short time we had 3 buyers making offers close to the list price. These offers were surprising even to us. While buyers are often willing to pay a premium for potential, rarely do they pay what the business will be worth once it reaches that potential. With so much interest, we encouraged our client to take a gamble and counter the offers at a price significantly higher than the list price.
Two buyers dropped out of the bidding, but we were able to negotiate an arrangement with one buyer to pay the seller's original asking price in cash at closing and an additional premium in price over 18 months in an earnout. The total selling price was 33% more than the listed price! This auto repair shop sold in May 2009 and because the business has exceeded the proforma revenue levels, the earnout is ahead of schedule and is on course to pay out in only 12 months.
The recession has taken it's toll of businesses; however, the car repair market has proven very resilient. Drivers have more readily spent money on their existing vehicles when they believe it may have to last longer. The Texas business market for these repair shops has been very active.
For owner's of car repair shops, there is more demand for your business than you may realize. The key is a properly designed and executed marketing plan designed to capitalize on today's small business market.
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