Hey folks, have an opportunity on a SS wash in the Charlotte NC area. Guy is looking to sell the business (building and equipment) and lease the land with an option to buy. Anyone have any rules of thumb for a gross sales multiplier? I was thinking something in the 2.5 - 3X range? Any thoughts would be welcome.
Estimating new wash value
- Thread starter washwon
- Start date
Mr Frank
New member
More information is needed in order to give a comprehensive response such as: How old is the car wash? How many SS bays? Are there automatics or room to add them on later? Location of the lot? Do you think the land would ever be worth more than the value of the car wash? Are there car washes nearby? What's the condition of the car wash and equipment? These are all things to consider when looking at value. I'm not an expert but I hope this helps!
Land is already worth more than the wash. Area is growing. Believe it is about 12 years old with 6 ss and a cloth auto. Many fast food places nearby, it is one lot off a major road. There is another wash on opposite side down the road about a half mile. Was thinking that if I can clear some cash and get the depreciation write off of building and equipment might be an interesting play with the option to buy.
robert roman
Bob Roman
Since goodwill is the sales and profit-making capability of a carwash business now and in the future, the value of personal property assets is only incidental to the future of the carwash business. It follows then, that price of the cash business should be evaluated by capitalizing future earnings. As such, there would be a number of things involved with the price assessment including but not limited to:
The desired return on investment
Conditions and terms of the lease
Assessment of facility, market potential, competition and management
Income and expense verification and reasonableness
Risk adjusted calculation of value
You may want consider taking some of the risk out of the deal evaluation by enlisting the services of a qualified industry consultant or appraiser that specialize in providing opinion of value for carwash.
The desired return on investment
Conditions and terms of the lease
Assessment of facility, market potential, competition and management
Income and expense verification and reasonableness
Risk adjusted calculation of value
You may want consider taking some of the risk out of the deal evaluation by enlisting the services of a qualified industry consultant or appraiser that specialize in providing opinion of value for carwash.
Definitely get some professional advice - an independent consultant or a distributor you feel you can rely on - one you know will give you an honest opinion, not one that you have just met or someone else recommends. The best choice would be an independent consultant that gets their money whether you buy or not. You might be able to save the price you might pay by getting a better deal. At the least you will have the benefit of a good evaluation of the business before you choose to buy.
Thanks for the thoughts gentlemen. Looks to be turning an operating income (pre depreciation, amortization and tax) of about $30K. With land lease expenses that would be more like $20K. Using an expected capitalized rate of return of 12-15% for my effort and risk, that would yield a purchase price of about $150K. There would be some good tax write off as the entire purchase cost would be depreciable, and as best I can tell he hasn't raised prices for years so with some sprucing up here and there, I could raise the prices some and still be below the competitors. Anyone have a numbers guy I can bounce this stuff off of?
Thanks
Thanks