Rambiss

Look at my post a few down. These guys will give great advice, research everything they say and you'll be in a good spot. From what you have described so far, my first thoughts are that you better be getting a smoking price and you'll want to have a solid understanding of what you'd be getting yourself into.

Breaking news update.........deals off. I offered him just over 2 times cash flow,with him carrying about 25% and he countered with 3 times cash flow and zero carry. I guess some things just aren't meant to happen. I truly appreciate all the advice and guidance.I'll keep looking, but for now I'm stuck making money for a corporation.

I guess I'll talk with my business broker on Monday about my tech concern and see what he can come up with.

Again, thank you. The techs were my biggest concern in the beginning of this and still are. Makes me feel good that at least I'm on the same page as you experts on that. I'm a millwright by trade, but been a maintenance manager for the last 10 years. I feel like that gives me a few advantages, I know the mechanical side, the business side and most importantly the customer service side. I've been in this town for 15 years, so I feel like I can replace the techs. My plan was to do exactly as you described, clean things up and build my own brand. I plan on finding the right master tech with the full purpose of building this together with him so he can take over for me in the future. I was going to start looking for techs right after my offer was accepted, if we can come to a deal. That gives me at least two months to get a few good techs in place before I take over.

Not that I am scared enough....... anyone else feel like buying this shop is a bad idea? There's a Big O Tire that sells 1.6MM with 275k cash flow, but I can't even come close to the 650k he wants for that. Isn't this better than starting from nothing?

I completely agree that the shop is under performing. I respect all of your opinions 100%. But it seems most of you are concerned or cautious, and I'm seeing huge opportunity. Great location. Great lease. Equipment is in good shape. Zero marketing. No brand identity. Competent, but slow techs. All this and still profitable. Am I seeing a huge opportunity that's not really there? I'm ready and willing to put in the time, effort and money. Am I far off base?

Thanks for all the help. Thanks to someone sending me a great spreadsheet, I can see there are some easy opportunities to trim some costs. It looks like the opportunity I've been waiting for. Decent customer base already established, great location with cheap lease, well equipped and opportunity to clean things up and increase business. I'm probably going to stick with around 2 times discretionary cash flow for an offer and see what comes out of it. That's under his asking price, so we'll see.

Thanks for all the help so far, of course now I'm asking for more. I'm trying to put a value on the equipment, knowing of course that it's not an exact science and it's only for the purposes of basing an initial offer on the business. Keep in mind the building is leased. Here's what I'm looking at: 8 two post lifts, which I estimated the value at $2000 each. Total of $16k. 2 Accu-turn bench lathes, which I estimated the value at $2500 each. Total of $5k. 1 Bear analyzer, with smog options, which I estimated the value at $7500. That's all the "major" equipment I saw, but I added another $6500 for the misc equipment for a total equipment value of $35k. Does this sound out of line? Shop doesn't do alignment, diesel engine work, tires or anything other than just a "general repair shop" stuff. I took last year's P&L to my accountant last week and he said the numbers look legit.

I would like to clarify my above post a little. When I said “outdated”, I meant that it looks like a cluttered shop with parts and small equipment (oil pans, hoists, creepers, etc) laying around everywhere. There are many benches, but you can barely see them through the clutter. The equipment itself is in good shape. The lifts look good and fairly new. There are two Accu-turn bench lathes. There’s a Bear analyzer/smog setup. Equipment wise it looks good, it’s just the shop is a mess. The building is leased, 8000 square feet at less than $3 per foot. He has ZERO marketing (phone book ad only) and is still gaining market share, his gross is up about 14% from last year. He’s part of the Napa Program, using Mitchell software. Shop is only open Mon-Fri 8-5:30. Treats customer’s very well and is getting 2-3 new referrals per week (according to him). He doesn’t offer an pickup/drop-off services or loaner cars, which I think would help.

Meeting went well. Very old school shop, cluttered in a bad way. Shop area is very dated. 8 lifts with enough room for at least twice that many cars. Waiting area is clean, but again, very dated and not women/family friendly at all......which is a priority of mine. Only two techs, both paid flat rate because the owner acknowledged them being slow. One is 67, other is just over 60. The younger being the master tech. Owner works the front and acts as the SA. He does own a 2 bay smog/very light repair shop and wants to fall back to running that place by himself only. Doesn't want the stress and hours anymore, basically wants to wind down to retire in the next couple years. My biggest concerns are learning the SA side enough quickly, feel I have the business/customer service side covered already. Also the techs are a big concern. Last concern is updating everything to bring it back to 'modern', especially the waiting area. Going to stress on this decision for awhile.........

Both of you bring up good points. In my opinion, at least one of the two techs and the SA won't be around for long. I don't think his smaller shop is big enough to compete, but both of these are concerns. A lot of our discussion will center around these concerns.

Thanks for the quick replies. I'm pretty sure he wants to downsize, but that is the first question that will be asked. This deal is working through a broker. I actuallthave the 2013 P&L statements and it looks OK and I have a great accountant who I can trust.

You guys really provided great insight on my last question, so I'm coming back for more. I'm meeting with the owner of the shop I'm considering buying this week. What should I ask? What should I look for? I have a laundry list of questions prepared, but I'm sure you all will give me something I wasn't thinking of. Quick background: Shop is going on 30 years, only 5 with current owner. He also owns smaller shop. Grossed $400k in 2013. Adjusted cash flow of $80k. Two techs and a service writer, all about 40 years experience. Good location, leased building. All around repair, from imports to small RV.

That information is exactly what my thoughts were. Funny thing is, every shop in the area (other than the franchise) are the same hours. Sounds like a possible competitive advantage to me. Thank you and more opinions are welcomed.

I'm very close to buying an existing auto shop and need an opinion or two about sales and hours of operation. The shop currently only works Mon to Fri, 8 to 5. What are your opinions on hours of operations and sales, obviously keeping profitability in mind.