Auto & Tire Service – Est. 1954
With 70% of income from tire sales and service, this service station is a one stop shop. Operating since 1954, this business has an established reputation with long-term customers. With 3 FT employees (2 mechanics & 1 tire technician), the owner does not need to work on vehicles. Another part-time employee assists on the retail portion of this business.
This business has the ability to fix most automotive issues with the exception of transmission and engine issues in their 6,800 sq. ft. facility. Though tire replacement and repairs are the primary focus- they also offer alignments, brakes, propane, kerosene, gasoline, and diesel fuel. Most work is completed within 4 hours, and they strive to return vehicles to the customer on the same day.
The owner of this business is ready for retirement and would be flexible throughout a transition period with a new owner. With an optimal location near the interstate, marketing to a wider audience of travelers would be an excellent opportunity for growth.
- Year Established: 1954
- Location and Service Area:
- Services: Tire services (70%), automotive service
- Building: 6,800 sq. ft.: Store front, storage, 2 garages with hoists, backroom
- Reason for Selling: Retirement
- Employees: 4: 3 FT (mechanics and tire tech), 1 PT
- Hours: M-F 8-5, Sat. 8-12
- Seller Training Period: Flexible 90 days transition
- Growth Opportunities: Market to a wider audience, increase team to meet anticipated increase in business, acquire additional locations, extend hours
- Current Owner’s Responsibilities: Owner/operator - owner does not do mechanic work
- List Price: $285,000
- Gross Sales:
- 2018: $720,878
- Cash Flow:
- 2018: $114,150
- Assets Included in Purchase*
- Equipment: Tire machine, balance machine, break lathe, welders, computers, fixtures, furniture
- Inventory: Tires, oil, automotive parts, automotive accessories, chemicals
- Intangible Assets: Long-established reliability and reputation, long-term customers with multiple appointments annually, excellent social media reviews, many word-of-mouth referrals
*amounts may vary
- Tire services (70%)
- Tire sales
- Tire replacement
- Tire balancing
- Tire repair
- Tire sales
- Automotive services
- General service
- Oil changes
- Brake replacement
Total Employees: 4
- 3 FT
- 2 Mechanics
- 1 Tire Technician
- 1 PT
- Market to a wider audience
- Increase team to meet anticipated increase in business
- Acquire additional locations, extend hours
The Firm Business Brokerage 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 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.
For this business, a 2018 cash flow was used with a prescribed multiple is 2.5. With this information, the computation is as follows:
$114,150 x 2.5 = $285,375
The fair market value found above positions the business list price at $285,000.
Purchase Price: $285,000
15%Buyer Down Payment: $42,750
15%Seller Financing: $42,750
70%Bank Loan: $199,500
Seller financing 5-year term at a rate of 4.50% equals a monthly loan payment of $797.
Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $2,622.
After business expenses and loan payments, a buyer with a 15% down payment of $42,750 would retain a profit of $92,003, which results in a 215% 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 $285,000 with the terms listed above, the coverage ratio is 3.24.
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.
2018 Cash Flow
|Annual Debt Service:||$|
Buyer's Net Operating Income (NOI)
The amount of money the Buyer will retain as profit.
2018 Cash Flow
|Annual Debt Service:||-$|
Buyer's Return on Investment (ROI)
The rate of return on the Buyer's down payment.
|Document Title / Description|
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