The Thrill Ride of the Summer
The Vespa scooter first entered the consciousness of most Americans when Audrey Hepburn and Gregory Peck zipped around on one in the 1953 movie Roman Holiday. The sexy Italian scooters were reintroduced in America in 2000, and this dealership was founded in 2002. Last year, its revenue hit $3.9 million, with net income reaching $353,069.
And the future looks bright. Though sales of scooters in the U.S. dropped by 4.2 percent last year, Vespa posted a 14 percent increase in U.S. scooter sales. This dealership should grow by 18 to 20 percent this year, the owner says.
The six models in the Vespa line range in price from $3,300 to $7,200 and get 50 to 70 miles per gallon of gas. More than its fuel efficiency, however, the Vespa's undeniable glamour accounts for much of the dealer's success. Its dazzling design and bright colors have a way of turning customers into evangelists. "Word of mouth is our really powerful driver," the owner says. Co-op advertising organized by Piaggio Group Americas, Vespa's parent company, doesn't hurt. The dealer also promotes the brand--at a profit, no less--by renting scooters to ad agencies to use as props in photo shoots.
The Asking Price: $1.7 million, excluding inventory of roughly 70 scooters. The owner rents a show room on a transferable lease that runs through 2012. He also rents a warehouse and service center nearby. He will finance up to $375,000 of the deal for five years. The price includes a two-year earn-out of $200,000.
Price Rationale: The typical valuation formula for a motorcycle dealership is four times earnings. The dealership's earnings before interest and taxes in 2006 stood at $353,069, meaning that this asking price reflects a multiple of 4.8 times earnings. Territory exclusivity and past financial performance may justify the valuation.
The Pros: The dealer's 11 staff members are passionate Vespa riders, and pride themselves on providing superior customer service. Piaggio provides its inventory of scooters interest free for six months. Since the dealership typically turns inventory in three to six weeks, the business is typically in a good cash position.
The Cons: The company faced a space crunch last year and probably will again. At times last summer, the owner says, his show room was so busy that people walked off without seeing a salesperson. A buyer may look to open a second location, but real estate zoned for motor vehicle sales in this area is scarce and costly.
The Bottom Line: Europeans have long favored these stylish scooters, and now the 61-year-old brand appears to be catching on in the U.S. This dealership is priced fairly, poised for growth, and supported by Piaggio, which is aggressively promoting the product's fuel efficiency through a big subway ad campaign.
|$1.9 million||$2.4 million||$3.9 million|
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