Does anyone know the current valuation multiples for a car wash business?

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February 10, 2020

by a searcher from University of Rochester - William E. Simon Graduate School of Business in Los Angeles, CA, USA

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Reply by a searcher
from American University in Washington, DC, USA
Before venturing into the car wash business, I gained valuable insights from two perspectives: PE firms acquiring car washes and experienced local car wash owners. My journey also involved exploring laundromats, where I encountered potential plumbing issues. These experiences taught me to carefully review infrastructure assessment in car wash valuation. The total value of a car wash's value can range on high or low relative to market competition, location, equipment, and design of the car wash facility. EBITDA multiples for car washes range from 4x to 6x, excluding real estate, with SS, In- Bay, full-service washes receiving the lowest valuation, followed by flex and express models. The average EBITDA multiple for car washes surged from 4x in 2019 to 7x by 2023, reflecting the growing interest and demand for car wash businesses in the market and highlighting the industry's resilience and appeal to investors. However, the true hidden value lies in the car wash strategic location. A full-service car wash in an strategic location can command a higher valuation. Learn about the equipment brands(Not all are equal!), and check if they have perform proper maintenance/conditions of the car wash equipment.
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Reply by an investor
from University of California, Berkeley in Moorestown, NJ 08057, USA
Business Reference Guide says 3 x SDE or###-###-#### EBITDA for a full-service wash. Note that this would not include the real estate, which can be expensive for a car wash. Why? Because permits to build a car wash are very hard to get in most built-up areas (NIMBY) and the ones that exist can get a premium.

This is also a business where owners have a tendency to underreport and pull a lot of cash out of the business, so be sure to look at water and utility bills when diligencing it, and use a CPA that knows the business. Self-service washes are even more so with the cash games. They are like laundromats in that respect. But they are much less labor-intensive. A guy I know has done well buying self-serve washes and adding self-serve tunnels and dog washes.

All that said it's a business that isn't likely to get disrupted, one of the few auto-related sectors that won't be threatened by the shift to electric. Longer-term, if cars go self-driving and become property of fleets and not privately-owned, this could change this space as the fleets may use their own wash facilities.
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