Car Wash Valuation

[Southwest MI Carwash]

Located in Michigan. What is everyone seeing for valuations on new wash purchases?

Looking in SE Michigan at a location:

250k Gross
125k Net Profit; Books are extremely clean 80/20 credit/cash
RE Value is approximately $300,000
1 auto, 4 bays.

Seller wants 4.5X Gross which seems high to me but location is extremely turn key compared to other projets ive seen.

 

[Eric H]

Open Excel, select loan calculator, input your numbers and figure out your loan payment.
The fed is scheduled to increase interest rates .5% in May and another.5% in June so you’ll have to factor that into your payment estimate. Try to get something locked in fairly quickly if you decide to move forward.
4.5x doesn’t sound bad if it truly is turn key. Plan a price increase immediately upon purchasing.
Of course, 3.5-4x gross would be better...

 

[Roz]

Have seen sales in the 3-5.5 range depending on location, revenue, and type/age of IBA equipment. Younger IBA the better and higher the gross the better - the higher the multiple since a good portion of expenses are fixed costs.

 

[soonermajic]

2 knowledgeable guys giving great advice

 

[Southwest MI Carwash]

Thanks guys! Location is great and I believe it is pretty turnkey. I was already factoring in the price of the rate increase and have already discussed with him taking a modest portion of it as an installment sale at 0%. Saves him a couple bucks on taxes now and the interest reduction gets keeps me whole.

 

[Eric H]

have already discussed with him taking a modest portion of it as an installment sale at 0%. Saves him a couple bucks on taxes now and the interest reduction gets keeps me whole.

Wait...he wants to hold the note at 0%? If so this guy is doing you a real favor!

 

[soonermajic]

Wait...he wants to hold the note at 0%? If so this guy is doing you a real favor!

Surely that's not what is meant...? If so, that's a brother-in-law deal to the max!

 

[mac]

Any business is only worth what someone is willing to pay for it. However I think other factors may come into play depending on the type of business. I have seen a Burger King going for 10 times gross. Saw a local auto parts store on a small lot sell for $1.1M.