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Automotive Repair, Body Shop, and Towing

Well-established business with excellent reputation!

CASH FLOW
$234,028

Specifications

  • Price
    $807,000

  • Revenue
    $1,785,384

  • Profit Margin
    13%

  • Location
    Western Connecticut

  • Service Area
    Local customers from the surrounding towns

  • Cash Flow
    $234,028

  • Inventory
    $6,000: Maintenance parts, liquids, etc.

  • Reason for Sale
    Focus on other non-competing business

  • Lease
    4,500: 8 bays, customer waiting area, restrooms, private office, external paint booth

  • Equipment
    $533,000: Tools, parts washer, computers, welding solutions, measuring system, 2 tow trucks, 1 wrecker, 1 pick-up with plow

  • Employees
    10: 1 Mechanical manager, 3 auto techs, 1 body shop manager, 4 body shop techs, 1 driver

  • Intangible Assets
    Excellent social media reviews, well-established business, knowledgeable team, several revenue streams to balance annual earnings

Located in Connecticut, this auto shop has four main revenue streams: repair, towing, auto sales, and body repair.  Body shop work accounts for sixty percent of annual revenues, with mechanical repairs earning thirty percent, and towing and car sales the remaining ten.  The shop features eight bays with plenty of room to meet current customer needs as well as room to grow without modifications to the current space.  Social media reviews are excellent and show a dedicated and satisfied customer base as well as the development of a continued trust since 1996.  The owner currently oversees financial management.  Oversight of daily operations is done in partnership with the two shop managers.  Seven technicians and one driver round out this well-trained team. 

 

The building is 4,500 square feet with a large paved lot in the front and the rear of the shop.   The back lot is secured with fencing, an alarm system, and other security features.  There are eight vehicle bays for repair work as well as a waiting area, restrooms, and a private office for the owner.  Also included is a 600 square foot paint booth located just outside the main building. 

 

Business has been growing year-over-year but continued additional revenues could be found in any of the of four service areas.  Both the body shop and mechanical repair division have room for additional capacity, while the auto sales can increase as desired.  The greatest potential for increased income is to focus on building towing business. 

Business Highlights

  • Year Established: 1996
  • Location:  Western Connecticut
  • Service Area and Customers:  Local customers from the surrounding towns
  • Services: Body shop (60%), mechanical auto repair (30%), towing and car sales (10%)
  • Lease: 4,500: 8 bays, customer waiting area, restrooms, private office, external paint booth
  • Reason for Selling: Focus on other non-competing business
  • Employees: 10: Mechanical shop manager, 3 auto techs, 1 body shop manager, 4 body shop techs, 1 driver
  • Seller Training Period: 90 days or longer as negotiated
  • Growth Opportunities: Room to grow in all four revenue streams through networking, advertising, or building the client base
  • Current Owners’ Responsibilities: Oversight, financial management

Financial Highlights

  • List Price: $807,000
  • Gross Sales:
    • 2018: $1,785,384
    • 2017: $1,746,177
    • 2016: $1,680,089
  • Cash Flow:
    • 2018: $234,028
    • 2017: $225,808
    • 2016: $171,742
  • Assets Included in Purchase*
    • Equipment: $360,000: Tools, parts washer, computers, welding solutions, measuring system
    • Vehicles: $173,000: 2 tow trucks, 1 wrecker, 1 pick-up with plow
    • Inventory:  $6,000: Maintenance parts, liquids, etc.
    • Intangible Assets: Excellent social media reviews, well-established business, knowledgeable team, several revenue streams to balance annual earnings

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 

Cash Flow Analysis

Description of Financial StatementTax ReturnTax ReturnTax ReturnNotes
201820172016
GROSS SALES$1,785,384$1,746,177$168,089
Net Income Shown on Financial Statement$317,930$298,233$199,679
ADDBACKS
Depreciation$17,079$28,676$70,911
Interest$3,695$3,575$2,812
Medical Insurance$18,972$18,972$18,972
Auto Expense$6,000$6,000$6,000
Simple IRA$18,192$18,192$18,192
Cell Phone$2,160$2,160$2,160
Amortization$0$0$3,016
Rent$-150,000$-150,000$-150,000$12,500/month onward going
TOTAL ADDBACKS$-83,902$-72,425$-27,937
Seller's Cash Flow = Total Addbacks + Net Income$234,028$225,808$171,742
Profit Margin13.11 %12.93 %102.17 %
.

Services

  • Body shop (60%)
  • Mechanical auto repair (30%)
  • Towing and car sales (10%)

Employees

Total Employees: 10

  • 1 Mechanical shop manager
  • 3 Auto techs
  • 1 Body shop manager
  • 2 Body shop techs
  • 1 painter
  • 1 Detailer and paint prep specialist
  • 1 Driver

Growth Opportunities

  • Room to grow in all four revenue streams through
    • Networking
    • Advertising
    • Building the client base

Valuation Details

The Firm used a cash flow valuation methodology to determine the purchase price of the business. 

The formula used is as follows:

Cash Flow       x          Prescribed Multiple     =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A prescribed multiple is determined by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiplier.

For this business, a 2018 cash flow was used with a prescribed multiple is 3.45.  With this information, the computation is as follows:

$234,028         x          3.45     =          $807,397

The fair market value found above positions the business list price at $807,000.

Funding Example

Purchase Price:                                $807,000

12.5% Buyer Down Payment:          $100,875

12.5% Seller Financing:                   $100,875

75% Bank Loan:                                $605,250

Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $1,881.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $7,954.

After business expenses and loan payments, a buyer with a 12.5% down payment of $100,875 would retain a profit of $116,014, which results in a 115% return on investment in the first year.

A lender is required to have a minimum 1.5 coverage ratio for any business loans extended. At a proposed purchase price of $807,000 with the terms listed above, the coverage ratio is 1.98. 

Please note that the decision of whether to extend a loan on any sale belongs to the bank, and this document does not guarantee specific terms or verify that financing is available. 

*The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.

Purchase Price:

$807,000

$
%
OR
$
%
OR
$
Years
%

Bank Loan Needed: $

Years
%
$
$
$
$
$

Funding Details

Business:

Offer Price: $

% Buyer Cash Down at Closing: $

% Seller Carry Back via Promissory Note: $

year term at a rate of %

% of Purchase Price secured by Buyer and Seller

Total Bank Loan Need: $

% of Purchase Price

Desired Loan Type:

Desired Bank Terms: year term at a rate of %

Total Business Assets, Inventory, and A/R: $

Total Undercollateralized Loan: $

Loan Payments

Monthly Payment to Bank: $
Yearly Payment to Bank: $
Monthly Payment to Seller: $
Yearly Payment to Seller: $
Total Monthly Debt Service: $
Total Yearly Debt Service: $

Conclusions

Fixed Charge Coverage Ratio

The bank will require a minimum ratio of 1.5 to be lendable.

Cash Flow:
2018 Cash Flow
$
Annual Debt Service: $
RATIO:

Buyer's Net Operating Income (NOI)

The amount of money the Buyer will retain as profit.

Cash Flow:
2018 Cash Flow
$
Annual Debt Service: -$
NOI:

Buyer's Return on Investment (ROI)

The rate of return on the Buyer's down payment.

Down Payment: $
NOI:
ROI: %

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.