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What is Your Bodyshop Worth?

Do you know what your businesses of body shop are worth the sorrow? Before we start, I would like to make a comment. All the times that a CPA made an evaluation of a body shop, I note that their opinion of value is much larger than reality evaluate the market will pay. It is not because the CPA' S do not know what they do because they; it is right that the market places a risk much larger top by buying a body shop than the accountants. What follows is an extract of one of these evaluations.

THREE MANNERS OF EVALUATING BUSINESSES

1. METHOD EVALUATION of CAPITAL. This method is basically employed when a body shop makes less than $400.000 per year in the gross income and the made salesman of the wages, but no true benefit above what it would be paid if working for others. On these businesses of size, a purchaser is been willing to pay the capital of the businesses but little or nothing for the goodwill. The equipment is usually value between $50.000 and $100.000, according to how much machines reinforcement the businesses have and how nice a cabin of jet the businesses has. I saw specialized sale of stores for more than the number above because they have a cabin of jet of truck or different businesses attached to the principal businesses. Examples them joined businesses could be a repair shop or an automatic towing. Moreover the place, the size and the quantity of hiring of real estate will influence the value of any businesses, with certain degree.

2. The second method, I call the ROUGH METHOD of SALES. This is employed when the sales are more than $1.000.000 per year but the benefit is unknown or finances are not available or reliable. Because of the experiment, a purchaser of body shop can make reasonable evaluations of future benefit, if they have basic information. Basic information includes the rent, source of businesses (DRP, STREET, or an AGENCY of HIRING of CAR), and them charms of the place. When this method is employed, the value seems to be approximately 3 months of sales or 25% the last 12 months of sales. This method is not highly reliable on companies with sales of less than $1.000.000, because the question of being advantageous is very dubious. Why this point of stop $1.000.000 is in annual sales? Multi-store the purchasers will have paid the directors good, thus much appear that their point of profitability is around million. Less than $1.000.000 in the sales is not even in value their time. Naturally we know that there are departures from the rules. Some of the exceptions are A. when a new place are a satellite store at a greater place. B The purchaser must please have a place in a sector specific to a DRP. C For débarasser of a competitor.

3. The third and the majority of method used to evaluate any businesses, including body shops, are the METHOD of BENEFIT NET. This method is based on the idea that businesses are worth the sorrow of what it produces, in the benefit and the advantages, for an owner. The body shops, like so much of other small companies, often do not show a benefit, at the end of the year. Strange, how that much of companies of various sizes very right arrive at the end upwards with little or not of benefit. What I find to astound really is that the IRS currently does not audit more companies then they. Because showing weak benefit, on the books, it becomes very difficult to employ the METHOD of BENEFIT NET to evaluate many small companies. Fortunately for me, I completely often can the hidden lucky find profits, of the businesses, by being added to the books, of the articles that we call the advantages of the owner.

Those include: Wages of owners, if a company. Personal cars and all the relative expenditure employees by the owner and his family who are deadened against the businesses, the insurance of fifre and the medical insurance disease for the owners. The depreciation is also a hidden benefit which is usually added for the taxable benefit to behind inside help to accumulate all the advantages of owners. And to finish, personal utilities, telephones, voyages, etc... that are deduced on the income tax return but are not really costs to run the businesses. After having said all this, which is the value of the businesses based on the method of benefit Net? The companies of the motor vehicles, particularly the automatic body shops seem to be sold for between 1.5 to 2 the years adjusted the benefit (benefit of book more of the advantages of additional owners behind inside). Moreover larger body shops making more than $2.000.000 in annual sales can be sold for much more, because the owner is making much more money, that right its wages and a purchaser will consider a part of the benefit a return on its investment.

Very large body shops which are bought by limited companies by actions controlled by the State are evaluated mainly on their return on the investment (benefit of percentage which is made on the money cash purchase price of purchase of the businesses.) These large purchasers can allow themselves to pay between 5 moments and 10 benefit annual Nets of periods, after having deduced the wages and the advantages from all the officers. Often those, limited companies by actions controlled by the State, of the high purchase prices of purchase include two important restrictions, which is really why they buy the businesses initially.

Initially: The businesses is bought for little or not true money. They employ the restricted action which is not negotiable during two years. And in the second place: Management is necessary to remain and run company for a certain period of the years. The basic line, as I see it, is that you sold your heart, not your business. A last comment on being sold at large companies; help of sky the salesman for which sells his business the action or the obligations of purchasers and the buying company is without the penny or the stock exchange market breaks. I made sell to a narrow friend his company for most of the time the money cash and a certain salesman carry behind the financing with DEC 1997. In fév. 1998 the buying company was in the bankruptcy, making with paper my friend judged sans.valor. Evaluating businesses, particularly the body shops, is an art not a science. Two people will not evaluate the value of the businesses the same ones.

Me am astounded who it even purchasing of the thing one thinks is large capital is what another purchaser thinks is negative important. The differences in opinion are what make interest of the life.

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