Valuing Car wash in 2016 market

[JPAutoWash]

I have seen a lot of posts on valuing car washes, but many are 3-6 years old. I am just beginning the process of selling my entire operation and trying to get a handle on value. I have one express tunnel and 3 locations with 2 IBAs and 3-4 SSs (depending on location). My total annual gross sales is just over $2MM and EBITDA at $1.1MM. I own the building and land at the tunnel and one of the SSs. The other two SSs or on long term land leases, I do own the buildings. I am selling because it is time. I want to travel and see the world. I spend virtually no time at any of the locations. I have onsite full time manager, full time maintenance guy, CPA that pays all bills, and marketing manager. I am actually in the way every time I visit a location. I don't know how to market the package or what kind of price to put on it. Any ideas ??????????

 

[Waxman]

I have seen a lot of posts on valuing car washes, but many are 3-6 years old. I am just beginning the process of selling my entire operation and trying to get a handle on value. I have one express tunnel and 3 locations with 2 IBAs and 3-4 SSs (depending on location). My total annual gross sales is just over $2MM and EBITDA at $1.1MM. I own the building and land at the tunnel and one of the SSs. The other two SSs or on long term land leases, I do own the buildings. I am selling because it is time. I want to travel and see the world. I spend virtually no time at any of the locations. I have onsite full time manager, full time maintenance guy, CPA that pays all bills, and marketing manager. I am actually in the way every time I visit a location. I don't know how to market the package or what kind of price to put on it. Any ideas ??????????

You could start with 3-4 X gross sales and work from there maybe.

In the end it's worth what someone will pay for it today. One friend of mine who is looking to sell mentioned meeting with his accountant to talk sales strategy. What you want to present to a buyer in my way of thinking is: 'this is a nice little turn-key operation'. In your case, it sounds like you have set it up to be exactly that way.

Let us know how it goes!

 

[cebo]

You need to hire someone to perform a business valuation. There are way to many variables to use a simplistic gross multiplier. There are professionals out there that can do this. It may cost you 5-10k but based on the size of you operation it would probably be worth it. Also, find a competent business broker to market it for you. As an appraiser I can tell you this is not a scenario for someone with a general certification in real estate appraisal without competence in business valuations.

 

[robert roman]

Calculating the value of carwash in 2016 market is no different than previous years. How to go about calculation depends on the circumstances.

For example, there are four sites, two different wash categories and different continuation factors (owns premise, long-term lease).

Properties also have management retention factors to consider such as willingness, ability, and likelihood to transition and remain.

Earnings should be recast for absentee owner’s discretionary expenses to allow potential buyers to determine true investment value in the business.

So, is continuation of earnings risk same for all properties (growing, stable, declining)? Is competition high, normal or low? Are there barriers to entry? Is expansion possible? What is likelihood of financing?

And so forth.

Most likely, the assessments for each wash will be different.

Since calculation of value involves business-only, 100 percent of corporate assets and goodwill (negotiable), strategy comes into play.

For example, sell each property separately, sell by category or sell 100 percent of company.

For these reasons, I agree with Cebo’s advice to engage someone to perform calculation of value. Then go carwash broker or commercial real estate agent.

After all, this is a nest egg and merits someone with considerable judgment and knowledge of the carwash industry.

 

[chaz]

So if you are making money and not involved with operations, I'd almost suggest keep the washes and travel and see the world! Then again I don't know your personal situation etc, etc! Good luck.

 

[tdlconceptsllc]

You could start with 3-4 X gross sales and work from there


I personally don't ever see how the numbers work out for people that are willing to pay 3-4xs the gross. To me a site is only worth what the NET PROFIT will support after all expenses. If it can't make the bank note already as-is plus all the expenses to me it's not worth buying and it never will asking 3-4xs the gross. I think so many operators just put a random big asking price on a wash a SWAG guess and hope some idiot will pay it and they do sometimes, then he will go upside down in 2 years and the bank will get it. New investors are suckers for thinking they can just step into this business and make the bank note and have extra money left over to reinvest from the business income unless you have alot of personal capital to invest in the business to make it grow and work it hard. I have seen this from a buyers stand point 3 months ago from a fellow I told him to run and he wouldn't listen called me up last week saying your right man should have listened to you wondering how to pay all the bills with winter coming.

 

[Waxman]

You could start with 3-4 X gross sales and work from there


I personally don't ever see how the numbers work out for people that are willing to pay 3-4xs the gross. To me a site is only worth what the NET PROFIT will support after all expenses. If it can't make the bank note already as-is plus all the expenses to me it's not worth buying and it never will asking 3-4xs the gross. I think so many operators just put a random big asking price on a wash a SWAG guess and hope some idiot will pay it and they do sometimes, then he will go upside down in 2 years and the bank will get it. New investors are suckers for thinking they can just step into this business and make the bank note and have extra money left over to reinvest from the business income unless you have alot of personal capital to invest in the business to make it grow and work it hard. I have seen this from a buyers stand point 3 months ago from a fellow I told him to run and he wouldn't listen called me up last week saying your right man should have listened to you wondering how to pay all the bills with winter coming.

of course the tax returns of the business have to support all expenses, including bank note.

the gross income multiplier is only one way to value a business, not the only way.

 

[boywonder]

You can always ask for what you want, but in the end its what someone will pay for it. If the new buyer is going to finance it, and the bank comes in with an appraiser and really low balls it, requiring them to lay out more cash, most likely that sale ain't going to happen. Im speaking from experience. Looked at a couple of washes for years, over 10 years to be exact. The washes bounced through family members as they had died or didn't want nothing to do with. Equipment and building were junk. Finally after they listed it with a real estate agent made one last effort. Their own numbers wouldn't support a bank note. Asked the real estate agent, that if I had to get financing and had to have an appraisal done, where did he think that number might be. Well it was about where my offer was. Later that year some sucker bought it, did some upgrades but its still a money pit, and ain't making any money. Put yourself in the shoes of your intended buyer and start there. Just my 2 cents, no change please.

 

[Greg Pack]

you might be better off splitting the tunnel and SS/IBA into two separate packages. They are slightly different. Several companies are buying successful express washes, such as Mr Carwash

 

[rph9168]

It depends. Splitting it up might make the sale go faster but the washes as a whole might bring a better price. Operations like Mr Carwash do not pay top dollar. Someone looking it as an investment might like the numbers the washes bring as a whole.