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Full Service Auto Repair Shop

CASH FLOW
$192,000

Specifications

  • Location
    Lincoln, Nebraska

  • Price
    $495,000

  • Revenue
    $861,492

  • Cash Flow
    $192,000

  • Employees
    4 FT; 2 service writers, 2 auto technicians

  • Equipment
    $265,620

  • Reason for Sale
    Retirement

  • Profit Margin
    20%

  • Lease
    $2,800

For 25 years, this automotive repair shop has exceeded the needs of its loyal customers. From an oil change to an engine replacement, no service is too complex for this reputable business. Two full time technicians have mastered repairs on all makes and models of vehicles- including Domestic, European, and Asian. Customer service sets this business apart from the rest – striving to offer honest prices and guaranteed work ensures repeat customers and an excellent reputation.

 

The business operates out of a 7,000 square foot location leased for $2,800 per month. It features 5 access garages and ample parking space for vehicles. 2 FT service writers work alongside the 2 FT technicians. Service writers are responsible for greeting the customers, writing up repairs, preparing estimates, sourcing parts, and contacting the customer with updates on their vehicle. This business also offers a courtesy shuttle to ensure customers have a way to and from their facility while a vehicle is being serviced.

 

This business has grown substantially over the years through word of mouth and local recommendations. Opportunities for growth would include an expansion of social media presence and increased local advertising. 

Business Highlights

  • Years in Business: 25
  • Location: Lincoln, Nebraska
  • Number of Clients: Approx. 29 cars/week in 2018
  • Services: All makes and models; Domestic, European, and Asian. Standard maintenance services, transmissions, engine repair/replacement, tire services, and advanced diagnosis
  • Lease: $2800 for 7,000 sq. ft. – 5 access garage doors, front office, break room
  • Reason for Selling: Retirement
  • Employees: 4 FT; 2 service writers, 2 auto technicians
  • Hours: M-F 7:30am – 5:30pm
  • Seller Training Period: 90 days transition
  • Growth Opportunities: Expand social media and increase local advertising 
  • Current Owner’s Responsibilities: Owner/Operator

Financial Highlights

  • List Price: $495,000
  • Gross Sales:
    • 2018: $861,492
    • 2017: $871,423
    • 2016: $827,317
  • Cash Flow:
    • 2018: $192,000
    • 2017: $164,908
    • 2016: $149,336
  • Assets Included in Purchase*
    • Equipment: $265,620
    • A/R: $12,086
    • Vehicles: $17,539
    • Intangible Assets: Excellent local reputation, long term staff in place, industry experts.

*amounts may vary

Cash Flow Analysis

Description of Financial StatementP&L StatementTax ReturnTax ReturnTax ReturnNotes
2018201720162015
GROSS SALES$861,492$817,423$827,317$784,088
Net Income Shown on Financial Statement$116,520$89,818$74,551$98,475
ADDBACKS
Compensation to Owner$62,400$62,400$62,400$62,400
11% Tax on total W2 Salaries$6,864$6,864$6,864$6,864
Depreciation$1,944$1,554$1,249$1,255
Cell Phone$2,400$2,400$2,400$2,400$200/month for personal lines
Simple IRA$1,872$1,872$1,872$1,8723% match
TOTAL ADDBACKS$75,480$75,090$74,785$74,791
Seller's Cash Flow = Total Addbacks + Net Income$192,000$164,908$149,336$173,266
Profit Margin22.29 %20.17 %18.05 %22.10 %
  • 20% Profit Margin!

Clients

  • Approx. 29 cars serviced per week in 2018

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • All makes and models
    • Domestic
    • European
    • Asian
  • Standard maintenance services
  • Transmissions
  • Engine repair/replace
  • Tire services
  • Advanced diagnosis

Employees

  • 2 FT Technicians
    • Complete all work on vehicles
  • 2 FT Service Writers
    • Greet customers, write up repairs, prepare estimates, source parts, contact customer w/ updates

Valuation Details

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 2.58.  With this information, the computation is as follows:

$192,000         x          2.58     =          $495,360

The fair market value found above positions the business list price at $495,000.

Funding Example

Purchase Price:                       $495,000

10%Buyer Down Payment:     $49,500

10%Seller Financing:               $49,500

80%Bank Loan:                      $396,000

Seller financing 6-year term at a rate of 4.50% equals a monthly loan payment of $786.

Bank loan 8-year term at a rate of 6% equals a monthly loan payment of $5,204.

After business expenses and loan payments, a buyer with a 10% down payment of $49,500 would retain a profit of $120,123, which results in a 243% 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 $495,000 with the terms listed above, the coverage ratio is 2.67. 

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. 

Purchase Price:

$495,000

$
%
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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