Do you have a license or the ability to obtain a license? 

Entry into almost all automotive-related disciplines requires a State or local license.  If you do not have a license, oftentimes, a seller may agree to stay on to qualify the business with their license for a period of time and charge you a fee for doing so until you can obtain your license.  Some sellers are not licensed; either an employee, family member, or friend may hold the license.  In this scenario, if you are unlicensed, it is very important to secure this person’s license as part of the purchase agreement.  


What are the present industry trends? 

Automotive-related businesses tend to be cyclical.  They are highly competitive in down cycles and can be very lucrative in up cycles.  Automotive-related industries always seem to lag about one to three months behind the general economy.  As we presently exit the downturn caused by the COVID-19 Pandemic, it may be a great time to buy an automotive-related business as uncertainty creates risk.  Risk provides opportunities for buyers to purchase businesses at prices deflated by lowered revenues and Seller’s Discretionary Earnings (SDE) created by the downturn. 


What are the key financial benchmarks?

• Most automotive-related businesses are expected to return between 15% to 20% SDE.
• Most generate about $200,000 in revenue per employee.
• Occupancy costs an average of 5.4% (rent and utilities).
• Material costs should be between 30 to 40% of revenue.
• Labor costs should be between 30 to 35% of revenue.

How are automotive-related businesses valued?

Auto Body Repair

• 25 to 35% of annual sales plus inventory.
• 1.5 to 2.5 times Seller’s Discretionary Earnings (SDE).

Auto Brake Services

• 30 to 35% of annual sales plus inventory.

Auto Dealers (new cars)

• 0 to 10% of annual sales plus inventory.
• 0 to 6 times Seller’s Discretionary Earnings (SDE) plus inventory.

Auto Dealers (used cars)

• Wholesale book value of cars plus parts, fixtures, and equipment.  There is no goodwill included.

Auto Detailing

• 40 to 45% of annual sales plus inventory.
• 1 to 2 times Seller’s Discretionary Earnings (SDE).

Auto Glass Repair/Replacement

• 45 to 50% of annual sales plus inventory.
• 1.5 to 2 times Seller’s Discretionary Earnings (SDE).

Auto Lube/Oil Change

• 40 to 45% of annual sales plus inventory.
• 1.5 to 2 times Seller’s Discretionary Earnings (SDE).

Auto Parts and Accessories

• 40% of annual sales plus inventory.

Auto Rental

• 45% of annual sales plus inventory.
• Number of cars times $1,000.

Auto Repair (auto service centers)

• 35 to 40% of annual sales plus inventory.
• 1 to 2 times Seller’s Discretionary Earnings (SDE of $75,000 to $100,000).
• 2 to 3 times Seller’s Discretionary Earnings (SDE of $10,000 or more).

Auto Tire Stores

• 50% of annual gross sales.
• 2 to 3 times Seller’s Discretionary Earnings (SDE).

Generally, third-party financing for automotive-related business acquisitions is readily available.  The primary method of financing an automotive-related business is SBA financing.  The SBA will generally lend up to 80% of the businesses' value on a ten-year note with variable interest set at two points above prime.  Seller financing is also prevalent, especially for businesses valued under $400K.  An untrained or inexperienced owner may find it difficult to obtain SBA financing.  If you lack adequate training or experience in the automotive discipline you wish to purchase, sellers may be reluctant to hold a seller note.



FIND AN AUTOMOTIVE-RELATED BUSINESS

Search for automotive-related businesses

To search for automotive-related businesses for sale in Florida, please click HERE. 


Assistance

For assistance in finding the right automotive-related business for you, contact Eric Gall at 239.738.6227 or [email protected].  Below is information on Eric's automotive experience, awards, and credentials.


About Eric J. Gall, MBA, CM&AP, CBI, ABI

Eric J. Gall is the registered broker and founder of Edison Business Advisors.  Over the past 20 years, he has participated in many forms of business transactions totaling over $175M. 


RESULTS

Eric won the 2018, 2016, and 2014 Business Brokers of Florida (BBF) "#1 Top Dollar Producer Award" for Southwest Florida beating out 91 other BBF brokers.  His 2018 and 2016 transaction volume ranked in the top 10 in the State of Florida out of 1,115 BBF brokers.  He is the only broker in the top 10 not located in the larger Tampa, Orlando, or Miami/Fort Lauderdale markets. He also won the IBBA 2019 and 2018 Chairman's Circle and Deal Maker Awards. He has been a BBF Million Dollar Seller in 2010 and 2012 through 2019.

    

CREDENTIALS

Eric is highly credentialed having obtained his Certified Business Intermediary (CBI) from the International Business Brokers Association (IBBA), his Certified Mergers & Acquisitions Professional (CM&AP) from M&A Source, and his Accredited Business Intermediary (ABI) from the American Business Brokers Association (ABBA).  He was the second broker to obtain a CBI and is the only CM&AP in Southwest Florida.

The CBI requires meeting stringent education and performance requirements as well as the high ethical standards of the IBBA.  The CM&AP requires achieving in-depth knowledge of the specialized approach required to successfully prepare and execute lower-middle-market transactions (above $1M in EBITDA).   The ABI requires meeting a specified number of years in the business and completed transactions.  Eric holds BSE and MBA degrees from the University of Michigan. 

              

EXPERIENCE

Prior to founding Edison Business Advisors, Eric bought, sold, and operated a chain of quick lube shops in Southwest Florida.  He also worked in corporate M&A at Ford Motor Company where he:

• Led the post-merger integration efforts for Ford, Jaguar, Land Rover, Volvo, and Mazda
• Oversaw the disposition of small automotive technology-based assets acquired by Ford prior to the internet bubble
• Managed global quality programs for Ford’s Parts & Service Division
• Was recognized as a corporate expert in multi-cultural negotiations

He is an active member of BBF, IBBA, and M&A Source.  He is the ABBA's Best Practices Forum Leader and Vice President of the BBF's Tampa Region.

By investing time and money in education, certifications, and best practices, Eric has achieved a tremendous return for Edison Business Advisors' clients who have successfully transacted businesses at a much higher rate than the industry average.