How do I price my wash for sale?

[Pinkys]

I own a 4 bay self-serve, 4 vacs, along with one reconditioned Autec soft cloth automatic. The site and self-serve bays were updated in 2009 and the automatic was added in early 2012. The city's population is about 22,000, and is the only wash in the older, lower income side of town, but does very well, grossing $120,000/year to date.

The closest competition is 2 miles away and has a tunnel that closes at 6pm. There are three other competitors close to each other on the other end of the city.

I am considering selling this business which includes the property and I am inquiring as to how to determine a fair market price.
I have contacted three suppliers who have given me three different answers, none of which are close to each other. I would rather not use a broker, but sell it myself.
Once I do have a fair market price, where is the best place to advertise it for sale? What do I need to do to prepare it for sale?
Would/should I offer some owner financing?

Do you have any advice for me?

 

[robert roman]

Fair market value is a function of nature of the business, financial performance, risk factors, competition and investment alternatives.

Appraisers, consultants, business brokers, etc. consider each of these elements in arriving at an opinion of value.

SBO is possible but business broker with “carwash experience” will usually provide good ROI on marketing wash.

Owner financing tends to increase the size of pool of potential buyers as well as shorten the marketing period.

Pricing to perfection requires three years of audited P&L’s, current balance sheet statement, federal income tax statement, car counts, list of F/F/E, legal description, site plan, etc.

Hope this helps.

 

[Waxman]

why would you ask suppliers what it's worth?

you've got to use a gross income multiplier and n.o.i. calculation, from what i have learned.

i'd sell it yourself, or at least try.

good luck!

 

[soonermajic]

Anyone else have some advice?

Did you sell it? If so, how'd you reach your price?

 

[Car_Wash_Guy]

Anyone else have some advice?

Did you sell it? If so, how'd you reach your price?

Perhaps check bizbuysell and see what kind of multipliers other SS washes are using to list for sale?

 

[getnbusy]

Not tryin to sound like a jackass,but....there is a big difference in "selling" a wash and "listing a wash for sale". In our love affair with car washes, we tend to get unrealistic in what our business is worth. I have found that the "property investors" don't give a rats patootie what the gross income is, or how pretty our equipment is, or what we paid for it. The property is only worth whatever debt the current net income will support. That's it. Anything more than that doesn't make financial sense. To pay more on hopes of improving the income is silly. #1 improvements cost money too, and #2 the increase in income likely won't be overnite. An experienced buyer will take the Net and use his desired cap rate as a way to calculate his opinion of value. That is how to price to "sell". You could list for sale with the "shoot the moon" , or try to "rope a dope" with the inflated value. You might get lucky. I guess it all depends on if you really wanna sell or not, and how long you're willing to wait for a buyer. My 2 cents

 

[Robert2181]

Hard assets $$$, goodwill $$$, property value $$$, business value $$$, (equipment = eye of the beholder. )

 

[dustpan]

Not tryin to sound like a jackass,but....there is a big difference in "selling" a wash and "listing a wash for sale". In our love affair with car washes, we tend to get unrealistic in what our business is worth. I have found that the "property investors" don't give a rats patootie what the gross income is, or how pretty our equipment is, or what we paid for it. The property is only worth whatever debt the current net income will support. That's it. Anything more than that doesn't make financial sense. To pay more on hopes of improving the income is silly. #1 improvements cost money too, and #2 the increase in income likely won't be overnite. An experienced buyer will take the Net and use his desired cap rate as a way to calculate his opinion of value. That is how to price to "sell". You could list for sale with the "shoot the moon" , or try to "rope a dope" with the inflated value. You might get lucky. I guess it all depends on if you really wanna sell or not, and how long you're willing to wait for a buyer. My 2 cents

I like that "only worth whatever debt the current net income will support". I am seeing a lot of businesses on business broker sites listed near 2.5 times annual net. I think to get the most for it, you owner finance it and the price will be what the net income supports. The longer you run it out (amortize) the more you will get. The lower the interest rate, the higher the principal. An owner salary in the expenses makes it more legit. It should also probably get a 10 or 20% down payment. I have two self serves that I would consider selling that way.

 

[mac]

Consider the owner financing option. If the hoped for buyer is new to the industry, banks will not touch him. Ask for 40 to 50% down with a balloon in 5 years. And if he gets 90 days behind, you get the place back. Know one guy here who did that 3 times to the same place.

 

[soonermajic]

Mac, explain that a lil better. I'M a HS bb coach, turned part time carwash guy. Somebody approached me about this & I said NO WAY...maybe I was wrong?

 

[mac]

While it is always nice to put something up for sale and get your asking price, sometimes the world just don't work that way. If I was selling a place I would keep an owner financing plan as a backup plan B. Like anything else, you have to do your due diligence. Check out the buyer. Get an iron clad purchase agreement written by a damn good attorney. If a new buyer says he can't get financing, tell him you will do it. Ask for a hefty down stroke. Figure monthly payments based on a 20 or so year mortgage. Then ask for a balloon payment after 5 years for the entire balance. That is what my bank asks of me on my shop and office. Stipulate that if he gets 90 days behind the monthly payment, you foreclose and get the place back. And you get to keep all of the money paid to you. Ask for inspection rights for the business. I'm sure others can suggest more conditions. Remember, if it comes to this, and the buyer really the place, this is his last option. Good luck. At least you own something that someone else wants !

 

[tdlconceptsllc]

If the owner represents the wash correctly by the true NET income on paper aka not in the gun safe at home. To me the site is only worth what the net will support. The wash should be able to pay all expenses.taxes,insurance,bank note, and owners withdrawl (as is before improvements) to make it worth while if not you can buy commercial rental property/real estate and be way better off. If the bank won't loan money to the buyer based on the P&L it may be a reason why they won't loan money on it if the numbers won't work then you would have to owner finance. If it can't do that your just selling a promise and a dream to someone. I know owner financing is best bc of capital gains if sell out write to buyer but I have seen a lot of people dreaming in reality on selling a wash wishing someone will come along that's never been in the Carwash business and pay something stupid. All I am saying buying and selling can be tricky situation if you don't pay attention on both parties I agree.

 

[Randy]

Up here in our area the value of the car washes isn't in the car wash it's in the land it sits on. Most car washes that are being sold are than torn down for redevelopment, light retail with a 3 or 4 story apartments on top. It's almost impossible to build a car wash here do to all the restrictions. Most cities don't want car washes so they have put so many restrictions on them. The last car wash we wanted to build the city put so many restrictions on the project that it made it not worth building. Some of the requirements were, a 6' block wall around 3 sides of the wash with a 6' iron fence in the front, a 24/7 on site attendant/manager with on site living quarters and operating hours of 8am to 8pm. The days of the Mom- Pop car wash is just about gone.

 

[2Biz]

Owner financing sounds enticing! Although, I wonder how a potential buyer (that could only purchase under this condition) would take care of your investment? Also, I wonder how they would have a hefty down payment if they couldn't get bank financing? I had to come up with 30% down when I went with Bank Financing...And at 7.5% interest, initially!

 

[mmurra]

Seller financing can be a strong motivator for many purchasers. If you do please consider setting up an escrow account at a local bank that both of you can access on-line, and collect monthly statements. All utilities, property taxes, building insurance and payment to seller are deducted from this account. Deposits into the account are made on the 15th and 30th of each month. Should the buyer fall behind in deposits to the escrow account, buyer is in default. Frequently, a buyer goes into default by deferring payments on the vendors that will not induce an immediate reaction. No immediate red flags. Later the seller repossesses the property and the deferred liabilities are substantial in terms of taxes and utilities due. In our state, utilities now follow the property owner, not the name on the utility bill. Beware!