Looking for a deal that will rev up your engines? Consider this independent Mercedes-Benz service-and-repair center. Profile includes price, valuation methodology, an evaluation of the company's prospects, and pros and cons.
The Business: Here's a deal that might rev up your engines: the largest nondealer service-and-repair center specializing in Mercedes-Benz autos, located in a metro region that's experiencing high-speed growth. Founded in 1984 and purchased by the current owner in 1993, this company has more than 2,000 loyal customers, acquired largely through word of mouth. What makes this deal so turbocharged? For one thing, the company has a 12-man staff including nine factory-trained technicians, who altogether possess more than a century of experience in servicing Mercedes-Benzes. And the business has developed a strong relationship with about two dozen top-quality parts suppliers. Its 11,500-square-foot facility is leased but was recently remodeled with more than $25,000 worth of leasehold improvements. The current owner is selling because of a partnership dissolution, but the rest of the staff would probably take a ride with a new owner.
Outlook: With an estimated 12,000 Mercedes owners in the area, this business's prospects already look strong. But a new owner could put sales into overdrive by adding direct-marketing efforts to individual car owners and by seeking corporate or fleet accounts. The recently remodeled shop is now three times as large as it was before, which means that it could accommodate plenty of new customers for any service not covered by the Mercedes-Benz warranty. There's also room to expand into servicing other luxury-car lines, but the seller warns that such a move would require an investment in new equipment and repair specialists.
Price Rationale: The only thing sweeter than a new Benz may be a company that's fairly priced -- an increasingly rare item in today's overheated marketplace. So here's the good news: car-repair companies typically sell for about 35% of annual revenues (about $390,000 in this case). Since this company has invested about $35,000 in inventory, $25,000 in its souped-up service facility, and $100,000 in equipment, the sale price feels about right.
Pros: A clearly defined customer base with plenty of room to expand, and a desirable, fast-growing locale. Expect a race to get to this finish line first.
Cons: If you can't stand the thought of owning only the alignment rack while your customer drives away with the Mercedes, you may want to steer toward another company instead.
*Before interest, taxes, depreciation, and owner's compensation.
Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered to the seller. Inquiries should be directed to Fritz Clayton at 702-248-9177.