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How Much is Your Auto Repair Shop Worth?

Shop Management

Bob Cooper

by Bob Cooper , President

By Bob Cooper

Not long ago, I had the opportunity to interview Hal Janke. He is recognized
by the top business brokers in America as an auto industry expert, he has owned
and operated auto repair businesses, he has spoken at many conventions, and in
selling over two hundred shops; he has sold more auto repair facilities than
any other broker in the country.

During the interview we were discussing the things that shop owners can do
to get top dollar for their shops, and towards the end of the interview we
started talking about how shop owners should go about establishing the value of
their businesses. As you can imagine, Hal said that there are a number of
things you need to consider.

Although your location, the tenure of your staff, and your day-to-day
responsibilities as the owner will all have an impact on the value of your
business, he said nothing will have a greater impact than the earnings history
of your shop. According to Hal, in today’s economy most auto repair shops will
sell at a multiple of 1-3 times annual earnings. The shops that sell at the
higher end of the scale (2.5 – 3) typically have a stable crew with good
tenure, they have a strong and active customer base, they are well equipped,
they are located in growth areas that have the right demographics, they have a
good reputation, and of course, they show strong earnings.

The bottom line is this: Most shop owners think that the values of their
businesses will be primarily based on their sales, their inventory, their
equipment, and the number of customers they have in their customer database.
According to Hal, that’s far from the truth. It all comes down to one thing:
Your history of reported earnings.

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