Due diligence for SS Car Wash

[TJ_DOT]

Hello Friends,

We are in process of acquiring a self service car wash. It has 6 bays, 4 out of which are Self Serve and 2 of them are IBA. IBA bays are barely function, so we have plans to sell the IBA equipment and replace it with new IBA equipment.

Right now, we are in due diligence period. Can some industry experts help me what are all need to be checked during the due diligence period.

Thanks in advance.

 

[getnbusy]

The income

 

[carwash_nashville]

We have checked their income and their w2 tax returns for last 3 years.

what can we check for the physical structure, besides roof ? Like plumbing, equipment,
Electrical, environmental reports.....

I am trying to get the complete list as this is our first car wash and trying to be cautious.

 

[Rfreeman]

Regarding income I wouldn't take their word or tax return, I would consider it but I would park myself across the street a few Sat and Sun in a row and watch the traffic through the place.

As far as the property is concerned make no environmental issues and you should be good. The ss equipment can all be rebuilt some guys on here have equipment 20+ years old and running fine. Depending what you have I would look to upgrade the bays with credit card, in bay dryers, etc.

The auto sounds like you guys are already going to tear out and start new.

 

[mac]

Even though you might be new to the business, there is still a lot that you can check out equipment wise. I start with poking around the equipment room. The cleaner and neater it is, the better. Are there spare parts? Are there boxes of old parts? If so toss them. Look in all of the chemical mixing tanks. They should be clean with no growth in them. There is usually a screen at the bottom of each tank and it should be clean. Then check EVERY function in all of the self serve bays. The low pressure functions (usually presoak, tire cleaner, foam brush, and maybe a bug cleaner) should come out of the gun in a nice fan spray and they all should be mixed with air to create a foam that sticks to a car. You should be able to see the wax and high pressure soap come out. Check all of the vacuums for strong suction and look at the seals around the doors to the vacs. No gaps allowed. Open the top door on the vacs and look at the filter bags. They will all be dirty but should not be real dark or stink. Check all vending machines and change machines. You can get a TDS tester to check the spot free rinse at many water treatment stores. Reading should be less than 30 parts per million. Ask the owner when was the last time he had the water softener rebedded along with the charcoal pre filter. Take notes. This will make the current owner think you really know the business. And good luck to you. Every owner that I started in the business was really surprised to find out how much work it took to operate one successfully, Having a good camera system that you can access via your phone is a real plus.

 

[AnalyticWash]

Where are you located?

 

[mac]

I’m in south FL on the west coast. Doing a road trip to Myrtle Beach next week.

 

[soonermajic]

Great in-depth list from Mac. I will say this though. If most of those things are negatives, then there might be a chance to shore em all up, & have a potential profit windfall.
I don't wanna buy a super neat & clean, everything working perfect, in a great location wash..... cause there's no meat left on the bone & prolly won't represent a strong "buy".

Remember, you make your money when you buy!

 

[mac]

Coach you make real good points. I would guess though that you’ve been doing this for a while and know how to do most everything at a wash in the most economical manner. TJ however is new to this. He would be at the mercy of service companies that mostly don’t know or care about him. Their goal is to run up the bill. We have all heard the horror stories. It is true for an experienced operator to buy a wash as you described. For someone new to this I lean towards getting a place that you can run successfully from the git go. I have always tried to keep my businesses in great shape. I get top dollar when I sell and the buyer gets a business where he only at first needs to be good at business and not an expert on the minutiae of how things work.

 

[Roz]

Look at water bills to see how much is used from the past year. You can figure out how busy the place is from them. All equipment can be replaced and your prices can be changed so more important to find a place in a solid location where the building is in great shape. Like a house purchase everything is negotiable. Depending on the situation (ie number of buyers interested in the place) you might be able to make a portion of the offer contingent on a 30-90 day inspection of the equipment. The old adage location, location, location should still rule the day, then market opportunity (size/competition/prices vs area). You a build a fairly good cashflow model from that info. Make certain the equipment room is large enough to accommodate the equipment you would want as some places have compromised on their setup due to a small equipment room.