Sell my Automotive Business

Over 60 years’ experience selling automotive manufacturers and garages

How to sell an automotive services business

Before the process of selling your automotive business begins, you should consider the main objectives for sale, and the goals you wish to achieve. Developing an exit strategy early on also gives you time to research the market, and better understand what buyers are looking for.

With the help of professional advisors, and possibly a business broker, information can be distributed to potential a buyer that presents your business in the best light. But what industry challenges might you be facing?

Regulatory requirements

In the drive to cut CO2 emissions and meet strict European targets, the industry has to continually invest in new technologies, and move towards the development of advanced electric vehicles.

Brexit

Automotive companies face considerable uncertainty as we leave the EU. Failing to successfully negotiate a free-trade deal with Europe could adversely affect ongoing investment in the UK automotive industry, as well as the recruitment and retention of workers from EU member states.

Lack of skilled workers

The industry is facing a skills shortage despite the significant investment already made in training and apprenticeships. The introduction and development of new technologies has also introduced a need for further training of existing staff.

Social media

Car buyers are using social media to gather information, read reviews, and make purchase decisions. Many automotive businesses have had to move away from their traditional advertising campaigns and product launches, to engage with customers on an ongoing basis via social media channels.

 

---

• Previous sales and acquisitions experience
• Sector specialisms and average success rate
• Sales value expectations and growth potential

Free Guide Download

10 Key Questions to Consider Before Appointing an Advisor

Our Essential Checklist to Selling your Business

Sell my Car Sales Business

If you are considering selling your new and used car sales business to generate returns from your investment or to simply exit from your company, using an experienced business transfer agent with proven knowledge of the automotive trade can help maximise sale value. The Selling My Business team have over 100 years’ collective experience in the business transfer industry, including sourcing buyers for independent and franchise motoring and car dealerships.

If you are a car trader catering to commercial customers, selling commercial fleets or serving private customers, selling individual cars, you are likely to attract different buyers with varied business interests. The trade of buying and selling cars is typically influenced by consumer appetite, seasonal trends and marketing activity, resulting in income and customer demographics to fluctuate regularly for car sales businesses. For example, during the coronavirus national lockdown, commuters were instructed to use private transport where possible to minimise the spread of Covid-19 on public transport. As UK car dealer sales increased during the pandemic, car prices hiked in line with consumer demand. 

By transferring your business to an interested buyer with the necessary knowledge and funds to invest in the company, you can secure future professional development of the business and ensure business continuity.

Sell my Vehicle Maintenance Business

The vehicle maintenance sector consists of a wide range of shopfronts, from MOT garages, service workshops and auto repair shops, to petrol stations, car washes and car valet businesses. If you are considering selling your vehicle maintenance business, we can source a buyer actively looking to acquire a business in the automotive industry. We have a strong track record of selling auto repair businesses specialising in providing private and insurance repairs, MOT services and general car maintenance services.

Due to the nature of the industry, vehicle repair and maintenance centres are likely to own a range of low to high-value commercial equipment, from brake testers, column lifts and inspection pits, to engine stands, car creepers and spare parts. We offer an automotive business valuation service to help you calculate the value of your business, including company assets.

How to value an automotive business

If you’re thinking of selling your manufacturing or repair business in the automotive sector, you may have considered - how much is my automotive business worth?  We have over 60 years’ experience in the trade of business disposals and acquisitions, bolstered by our in-house, valuation team who are veterans in the field of business transfer. We can calculate the monetary value of your business, giving you guidance towards a possible sale price for your automotive business, repair centre or garage.

Value my automotive business

The process of valuing an automotive business requires careful consideration of more than just the profit and loss accounts – the Selling My Business team will delve into overheads, the gross profit margin and take a forensic approach into the analysis of 3 years’ worth of historic/recent accounts. Our automotive business valuation service outmatches that of other business transfer agents as we eliminate the risk of under and overestimation and combine our extensive understanding of the industry. 

Prospective buyers will take into consideration several aspects of your automotive business, such as the location, reputation and specialisms. Due to the nature of the profession, the physical location will determine the type of customers likely to walk through the door and the value of vehicles as a fraction of custom is typically through walk-ins, worth of mouth and local marketing.  The reputation of your automotive business may hold personal value to a buyer as if your auto repair business is well renowned and upholds high customer service standards, this is likely to encourage customer loyalty.

As the vehicle maintenance sector is largely skills-based and dependent on owner knowledge, an automotive business with an outstanding reputation is likely to drive more customers to the door. Business development efforts with commercial businesses can also help increase recurring income, holding value to prospective buyers. The interpretation of company worth may vary for each prospective buyer, the Selling My Business team will guide you throughout the process and help maximise sale value.

Presenting your business to potential buyers

Prepare in advance

To present your business in the best light, you need to make sure that your systems are working efficiently, and that management information is readily available.

Your buyer will be looking for cash flow stability, profitability, and an indication of customer satisfaction, so good credit control and management of stock is crucial to demonstrate that the business has solid foundations.

Sales Memorandum

Within the sales memorandum, you need to include:

• Financial information such as historic profit and loss statements, profit and revenue forecasts, asset valuations, and details of all existing and contingent liabilities
• Legal details of staff and supplier contracts
• General information on why you are selling the business, how it works on a day-to-day basis, your customer base, and how profits are derived

You may need professional assistance to put together the sales memorandum, also known as an information memorandum, but you should avoid providing detailed financial information at this point.

A business broker with previous practical experience in the automotive industry can advise on what to include, and will also be able to negotiate with potential buyers on your behalf.

Finding a buyer

Once you or your broker has identified potential purchasers, the sales memorandum can be distributed, along with a projected timetable for the sale and a request for any opening offers.

You can then narrow down a shortlist of buyers, using their current financial situation and likelihood of being able to meet your terms. Once you have negotiated to a more advanced stage, a particular buyer may stand out from the others, at which point a Heads of Term agreement can be considered.

Heads of Term agreement

A detailed Heads of Term agreement is signed following in-depth negotiations with your chosen party, and this precedes a period of due diligence by the prospective buyer. They will want to ensure the information you have provided is accurate and reliable, and amongst other activities, will scrutinise your accounts, talk to some of your staff, and confirm which assets are wholly owned by the company.

Sales Agreement

The sales agreement marks the final step in the sale of your business. It is a detailed document that may include warranties or indemnities if your buyer is concerned about how the business will perform following the sale. 

It is crucial that your legal advisor confirms the requirements for these prior to signing. They could involve you in a future claim for compensation if the information you have given is later found to be inaccurate.

Your buyer may also request and ‘earn out’ agreement whereby you remain in the business for a pre-agreed length of time, usually on a consultancy basis, and receive staged payments in addition to a reduced initial lump sum.

How can I sell my automotive business?

If you would like to sell your automotive business, you can use a business transfer agent to take a guided approach, access industry knowledge and reach thousands of proceedable buyers. Reputable business transfer agents typically require payment during the final stages of the process - no payment in advance. As part of our service, we offer an automotive business valuation conducted by our in-house valuation team who will be able to share guidance on how to maximise sale value. Your dedicated account manager will assist you throughout the full course of the process, including negotiating a competitive sale price which matches the market value.

Founded over 60 years’ ago, the Selling My Business team have a proven track record of selling garages, auto repair businesses and car dealerships, demonstrating an extensive understanding of the industry.