Oil change/Auto repairs LOI

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by a searcher
in Houston, TX, USA

9mos ago

Oil change/Auto repairs LOI

I am looking to purchase and oil change/auto repair shop. The asking price is $825,000 and it’s broken down into real estate, 425,000 and the business,$400,000. The business has been in existence for over 20 years and the last three years it had revenue of over $700,000. The owner pays himself 180k per year as salary and the net operating income is around $25,000. According to the broker, the store sees between 14-15,000 cars per year and it has five bays. For those experience in this kind of business what do you think about this deal?

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reply by an intermediary 9mos ago
from The University of North Carolina at Chapel Hill in Nashville, TN, USA

Assuming the LBO model works out it sounds like a decent business. Personally, I like that there's no auto repair and would try to add something with a better margin like brakes. The other tough part is that auto shops are hard to scale. So if you're good with one location for many years then great.

reply by a searcher 9mos ago
from The University of Chicago in Chicago, IL, USA

I have strong auto experience. The issue in this space is retention and hiring of auto techs and mechanics. They are turnover either quickly or become more expensive. Definitely need to scrutinize their turnover highly. Also you adding mechanics your probably going do some deep dive into understanding mechanics of cars (if you haven’t) because some trade knowledge will def be helpful here. EDIT: also probably helpful to understand how quickly they turn cars for oil changes currently cause adding mechanics will probably change the timing on it in some form of capacity. Especially if your aren’t adding car bays