What You Need to Know to Value an Auto Body Shop
We have developed a comprehensive questionnaire in order to help you determine the value of an auto body shop before purchasing it.
What You Need to Know in Order to Value an Auto Body Shop
One of the problems when shopping around for an auto body shop to purchase is that the sellers may not be forthcoming with information regarding the financial health of their business. Auto body shop records can be confusing and misleading, and can be open for misinterpretation if you are not an expert. So how can you determine how much a shop is really worth?
After 20 years of valuing auto body shops, I have determined that from the following information alone an experienced auto body shop owner or an experienced automotive due diligence expert can determine the value of an auto body shop, without ever looking at a financial statement or tax return.
Initial Questions to Ask the Seller of an Auto Body Shop
By compiling the following information, a buyer should be able to get a full picture of the auto body whop they are looking at:
- Size of the building
- Size of the total lot.
- Monthly rent, including the CAM (Common Area Maintenance). If business is owned by seller: What rental amount does the seller want from a buyer? What rent does the seller currently charge himself on his company books?
- Number of spray booths? How many are heated and what type of heated spray booths? (Downdrafts and Side drafts are the two main types of heated spray booths.)
- Number of frame machines and the Make and Model number, if the seller knows?
- Does the business have any DRP (Direct Repair Program) Contracts? If yes, what are the names of each insurance company?
- What % of the volume is DRP business?
- What is the annual gross income of the business?
- What is the real owner’s take home earnings from the business, regardless of the form that it is received” (Salary, personal expenses written off by the business and cash income not reported)
Using the Business’s Information to Value the Body Shop
Using this information can help buyers make a good decision about purchasing a body shop, without having to look over financial statements, which do not always give a full picture of the financial stability of a company. Contact us today for more information about a due diligence consultation, and how we can help you determine how much a business is worth.
