Passively Owned Auto Service & Repair - 3 Locations
This passively-run auto service and repair company has 3 locations across the Omaha metro. In business for over 45 years, the current owner profits over $170,000. Average sales from the last 3 years amounted to upwards of $1.2M. Full auto services are performed, from engine repair and diagnostics to oil changes and wiper blade replacement.
As the business has passive ownership, all employees are in place for smooth operating. There are currently 15 employees, with a manager at each location. One of the managers also acts as General Manager and oversees the other 2 shops. The smallest location is just over 3,200 sq. ft. and the largest is nearly twice that at 7,200 sq. ft. Additionally, all locations are in different parts of town and do not compete with each other.
Growth exists in increasing advertising. A buyer should also consider adding more locations in Omaha, across the river in Council Bluffs or across eastern Nebraska. Listed at $560,242, a buyer paying 12.5% down should profit $60,984 in the first year after debts.
- Year Established: 1970
- Location and Service Area: Omaha metro
- Services: Full auto servicing from engine repair to oil changes and wiper blade replacement
- Building: 3 locations:
- Location 1 – 7,200 sq. ft.
- Location 2 – 3,204 sq. ft.
- Location 3 – 3,608 sq. ft.
- Reason for Selling: Retirement
- Employees: 15 – Manager at each location
- Hours: Mon – Fri 7:30am to 5:30pm, Sat 8am to 3pm
- Seller Training Period: 90 days
- Growth Opportunities: Increase advertising or open more locations in Omaha suburbs
- Current Owner’s Responsibilities: Passive
- List Price: $560,242
- Gross Sales
- 2016: $1,233,652
- 2015: $1,119,061 (anomaly due to road construction that affected access to 1 location)
- 2014: $1,277,001
- Owner Profit/Cash Flow
- 2016: $172,382
- Profit Margin: 14%
- Assets Included in Purchase:
- Equipment: $315,000 replacement cost - hoists, alignment machines, tire machines, jacks, lifts, computers, furniture and more
- Inventory: $10,000
- Intangible Assets: Reputation, company longevity, established name
*amounts may vary
Cash Flow Analysis
|Description of Financial Statement||Tax Return||Tax Return||Tax Return||Notes|
|Net Income Shown on Financial Statement||$-58,820||$-70,298||$-44,743|
|Management Fee||$83,950||$82,000||$128,575||Paid to seller|
|Unrelated Wages||$10,560||$10,560||$10,824||Paid to family member (not business related)|
|3 Location Rent Adjustment||$21,600||$0||$0||Onward going expense of $110,400|
|One-Time Costs||$17,950||$0||$0||Software conversion of $8,799 and roof repair of $9,151|
|North Location||$90,959||$76,057||$70,200||North location not in purchase price|
|Seller's Cash Flow = Total Addbacks + Net Income||$172,382||$101,006||$173,180|
|Profit Margin||13.97 %||9.02 %||13.56 %|
- 14% profit margin for passive ownership
- Consistent sales at or above $1.1M
- YOY sales through August are $789,047
- Sales through August 2016 were $789,987
- A new technician has been added
- New marketing (Bay IQ) is being tested to help improve sales
- Cost of $14,400 per year
- Utilities were up by $3,500 due to an employee error that has been corrected
- Labor rates have been raised by from $98 to $105 (an increase of 7%)
- Labor sales are generally around $500,000 per year
- Increase in rates should result in an additional $35,000
- Location 1
- 7,200 sq. ft.
- $4,200/month base rent
- Location 2
- 3,204 sq. ft.
- $2,500/month base rent
- Location 3
- 3,608 sq. ft.
- $2,500/month base rent
|A/C and heating||Clutches||Filters|
|Water pumps||And more!|
- Roughly 1/3 of job tickets are for exhaust work
- Appointments can be booked through the company website
- Before labor costs, service jobs generally gross 75% at minimum
- $98 is the shop rate, but a buyer could up that to $104 to stay in line with competition
- Vehicle inspections are a charge of $100
- Occasionally does work on city vehicles, but there is no contract in place
Sales & COGS Analysis
- Location 2 has grown by 46% since 2015
- Location 3 has increased sales by 26% since 2015
- COGS range from 22% to 25%
- 15 employees
- Each location has a Manager
- Additionally, one of these managers also acts as a General Manager for all locations
- A part-time bookkeeper handles bills, inventory and payroll
The owners are passive, generally overseeing the company, and doing some inventory and accounting work. A buyer could choose to be absentee.
Included in the purchase is shop equipment, furniture, fixtures, inventory and vehicles. Below is a sampling of some of those assets:
|Alignment machine||File cabinets||Jacks|
|Lifts||Transmission flush machine||Snow plow|
|2 pick-ups||Signage||Wheel balancer|
|Exhaust lifts||Hoists||Welding equipment|
The estimated replacement cost of assets is valued at $315,000.
A detailed asset list is available upon signing a Non-Disclosure Agreement.
- Raise hourly rates
- Current hourly rates are $98, but a bump up to $104 would put this company more in line with competition
- Open locations in Omaha suburbs
- This business thrives on a customer demographic that continually repairs older vehicles
- The suburbs of Omaha usually have many teenaged drivers that do not have the capital for newer cars and, therefore, require more repair services
- Increase ownership responsibilities
- The current owners take a passive interest in the business, but a more active buyer could take on some of the bookkeeper’s duties or the General Manager’s duties to boost the bottom line
The Firm Business Brokerage used a Cash Flow Valuation methodology to determine the Purchase Price of the business.
The formula used is as follows:
2016 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 multiple is prescribed 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 multiple.
With this information, the computation is as follows:
$172,382 x 3.25 = $560,242
The Fair Market Value of this business is $560,242.
Purchase Price: $560,242
10% Buyer Down Payment: $70,030
10% Seller Financing: $70,030
80% Bank Loan: $420,182
Seller Financing 5-year term at a rate of 4.5% equals a monthly loan payment of $1,306.
Bank Loan 5-year term at a rate of 5.25% equals a monthly loan payment of $7,978.
After business expenses and loan payments, a buyer with a 12.5% down payment of $70,030 would retain a profit of $60,984, an 87% 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 $560,242 with the terms listed above, the coverage ratio is 1.55.
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.
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: $
|Monthly Payment to Bank:||$|
|Yearly Payment to Bank:||$|
|Monthly Payment to Seller:||$|
|Yearly Payment to Seller:||$|
|Total Monthly Debt Service:||$|
|Total Yearly Debt Service:||$|
Fixed Charge Coverage Ratio
The bank will require a minimum ratio of 1.5 to be lendable.
2016 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2016 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
This folder is empty.
Access to this Deal Room is restricted
Would you like to access the deal room?Yes, please
Already have an account? Log in here.
Print, sign and send to:210 N 78th St. 2nd Floor
Omaha, NE 68114
Or fax to: