Car Wash Valuation - Just looking for estimates

[hkim310]

Any advice on how much you think these 2 car washes are worth to a potential buyer? Different owners and different properties. I know to do a TRUE valuation, more information would be needed but I'm just looking for a ballpark.....

Car Wash #1 -
Yearly Gross Sales - $1,000.000
Yearly Wash Total - 45,000
Property Size - 5800 sq ft
Car Wash Type - Full Service


Car Wash #2 -
Yearly Gross Sales - $2,500,000
Yearly Wash Total - 140,000
Property Size - 18,000 sq ft
Car Wash Type - Flex Serve

 

[robert roman]

Some analysts suggest using income to test the value of express and self-service and EBITDA to test full-service (say, 6.5). Test for flex is not mentioned in trade publications.

I take this approach.

Potential buyers normally determine true investment value of a business based on free cash flow or current net earnings in the business.

If wash-1 has EBITDA $300,000, ballpark value would be $1.05 million.

Next, what is potential buyer purchasing, business-only or 100 percent of company?

If business only, ballpark value would need to be adjusted for risk and the goodwill value would need to be calculated.

If the purchase includes real estate, then ballpark needs adjusted to account for fair market value of land, buildings and furniture, fixtures and equipment and inventory less any liabilities to be assumed.

So, 6.5 times EBITDA may grossly understate worth from buyer’s and seller’s perspective.

$2.5 million gross from an 18,000 SF property (wash-2) is obscene. Volume is double the benchmark. Such businesses (above normal profits) are normally priced to perfection.

Here, the asking price for 100 percent of corporate assets might be based on 10 times EBITDA.

Conversely, what is likelihood of potential buyer willing to pay this for 18,000 SF site?

Hope this helps.

 

[hkim310]

Thanks for the reply Robert. In the scenario I outlined above, both properties were to include real estate. Before posting this question on the forum, I had come up with some calculations that seem to be in line with what you have mentioned as metrics to get a good "estimate valuation".