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STRATEGY

Business for Sale: Wanna Sit in the Driver's Seat?

Check out this 10-year-old vehicle repair, maintenance, and towing service.
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Business for Sale

THE BUSINESS: Since the only certain things in life are death, taxes, and automotive breakdowns, here's a deal on a recession-proof business that any entrepreneur could love: a 10-year-old vehicle-repair service whose revenues and earnings have risen by more than 50% during the past two years. What has fueled such high-octane growth? This suburban Maryland shop has aggressively pursued three strong niches: The first, fleet maintenance, accounts for about 40% of annual revenues, which come from lucrative contracts with commercial and municipal customers. The second, towing, brings in about 25% of annual revenues. The third, consumer traffic, brings in 35% of revenues, with retail customers drawn to the company's convenient location, visible from a major highway. Besides the valuable fleet-maintenance contracts, the big assets here are real estate (the two-acre site has 100 parking spots and three one-story buildings that accommodate car and truck bays as well as offices), $225,000 worth of parts inventory, five tow trucks, and two road-service trucks. The owner wants to turn the ignition on some other business deals, but his staff of 14 full-timers (mainly skilled mechanics) should stick around for the next shift.

PRICE: $2 million, including real estate. A deal without real estate is possible, priced at $925,000 plus parts inventory (or about $1,150,000).

OUTLOOK: A growth-oriented buyer could put the pedal to the metal here, since this company's huge repair shop and high-quality team of mechanics could easily handle 20% to 25% more business. And that's not all: by adding more shifts (especially on the weekend), the owner estimates, the current facilities could accommodate as much as an extra $300,000 worth of business monthly. Wondering where you'd find all those profitable repair jobs? You could rely on local advertising venues (like the yellow pages and PennySaver publications) to broaden your consumer reach. Or if you're ready to move your marketing efforts into the fast lane, invest in a campaign to bring aboard more commercial- and municipal-fleet customers.

PRICE RATIONALE: There's no reason to hit the brakes when it comes to the price of this business. Specialized car-repair shops tend to sell within a range of 30% to 40% of annual sales. That would suggest a starting point of $570,000 to $760,000 on a deal without real estate. Once you consider the value of inventory ($225,000); the company's fixtures, furniture, and equipment (more than $300,000); and its multiple fleet-maintenance contracts, the asking price looks like a bargain. Here's the best news of all: although the real estate is worth buying if you can afford it, the seller is willing to be flexible (always the right strategy in a tough selling environment). He'll provide the buyer with a long-term lease with an option to purchase later if you find yourself strapped for funds now.

PROS: A recession-proof business, a realistic seller, and plenty of profits. You could ride this business all the way to the bank.

CONS: There's no glamour here. If you'd rather own a fleet of vehicles than repair them, look for another business to help drive your revenue stream.

Maryland-Based Vehicle Repair, Maintenance, and Towing Service
GROSS REVENUES EBITDA * OWNER'S
COMPENSATION
1999 $1,222,507 $227,055 $64,832
2000 $1,669,669 $365,471 $64,832
2001 ** $1,900,000 $395,168 $64,832

*Earnings before interest, taxes, depreciation, and amortization.
**Projected.

Inc has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Al Horvath, at VR Business Brokers, at 410-772-0006.


Incubator

High Concept: Bright Writes
Dossier: The Sturgeon General
Search: Everything You Need to Know About Everything You Need to Know About
Main Street: The Odds Are Stacked
60-Second Business Plan: The Butts Stop Here
Business for Sale: Wanna Sit in the Driver's Seat?


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Last updated: Mar 1, 2002




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