Maximizing the Value of a Tire and Auto Service Center (Part 1 of 2)

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Posted by Tully Ryan on

Thinking of selling your Tire and Auto Service business?

In this first of a two-part series, we will discuss the current climate and industry trends.  In the second part of the series, we will discuss how to maximize your value through your financials, team, and curb appeal.

The current financial climate has put business owners in a very advantageous position.  This is especially true as more buyers want to test their entrepreneurial spirit and try their hand at small business ownership as well as the trend of industry aggregation by larger chains. All of these factors create a ‘Seller’s Market’, and in conjunction with good clean financials, give business owners looking to sell their business a serious edge.

One of the most popular industries for entrepreneurs looking to buy a business is in the $250 billion U.S. automotive aftermarket industry. Auto Service businesses can cover a broad spectrum of offerings ranging from lube and oil change to car dealers to auto and tire service centers. While there are variations between sub-sectors in the auto services industry, profits can range from 5% to as high as 12% and experts are predicting a 5% growth in the industry. Consumer spending is also up in the auto services industry as we see personal income rise, and with more favorable industry trends:

  • 260 million vehicles on the road
  • Increasing age of vehicles (12.0 years)
  • Average annual miles driven per vehicle up ~2% y/y*
  • Decreasing number of service outlets and bays
  • Increasing complexity of vehicles
  • Favorable demographics

If you own a business in the auto services industry and have been thinking of selling, now is the time.  The first step is getting a valuation. Once you have a baseline of what your business is worth, you can begin taking steps to improve the value of your business before putting it on the market. After selling many auto businesses over the years, Murphy has helped many business owners increase the value of their auto services business prior to selling so that they can secure the highest possible sales price at closing.