Bridging the Way BayState Business Brokers blog

How to Sell an Auto Repair Shop for the Best Price

by | Dec 4, 2017

Make Sure Your Auto Repair Shop is Ready to Sell When You Are

Auto repair is a big business.  According to IBISWorld, the total revenues of auto repair shops is $63 billion dollars.  It is also a steady, growing, business and there are many buyers interested in buying an auto repair shop.  If you are thinking of selling your auto repair business, now or in the next few years, here is some information you should know to sell your auto repair shop for the best price.

How to sell an auto repair shopThe primary driver of the selling price of an auto repair business is the income it generates to the owner.  A buyer, and a lender, will look at your tax returns for the most recent 3 years to determine the income it generates.  In addition to the salary you are paid and the profits of the business, they will add back personal benefits, such as a company car or pension plan that the business expenses, as well as the interest expense of the business.  Be sure that your tax returns show your income.

Although the income the auto repair shop generates is the primary basis for an offer, other factors will affect the selling price.  Here are some of them and what you can do to make sure they increase the value of your business rather than decrease it.

The quality and breadth of your equipment is important.  If your equipment is old or obsolete, the buyer will deduct the cost to upgrade it from his offer.  If you don’t have the electronic equipment to repair most cars on the road, the cost to add this coverage can be an expense the buyer will deduct from an offer.  However, I don’t recommend that you spend money to upgrade equipment that may not need to be replaced soon.  You probably won’t get that back in an increased selling price.

Your personnel situation will affect the selling price also.  You should have enough mechanics to handle the customers.  It helps if they have been with you for a few years and that their compensation is inline with industry averages.  A buyer will look for the potential to grow the business, but won’t pay you for what he is going to do.  Even a buyer with an existing auto repair shop is unlikely to have extra mechanics to bring into your business.

Consumers look at online reviews and company websites when choosing where to take their vehicle for repair.  Be sure you have good reviews and an attractive website to market your business.  Be sure your business is attractive.  Clean it up so it has curb appeal to customers and potential buyers.



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