Auto body shop valuation
Need to get a valuation for an auto body shop? First, consider some industry sector stats.
Auto body repair shops are a sizable part of the very large auto services industry. The companies address the essential need in collision repair, car exterior and interior maintenance and a host of value added services that go along with keeping your auto in top shape.
To see just how important these firms are, take a look at the industry numbers. Classified under the SIC code 7532 and NAICS 811121, there are over 157,000 such companies throughout the US. As a whole they produce $90B in annual sales. The average auto body shop is rather small with some $578,000 in annual revenues and a staff of just over 5.
From time to time auto body shops sell either to other owner-operators or as part of a larger scale consolidation in the local or regional market. When the sales of businesses occur, the actual business selling prices indicate just how valuable the companies are, at least in the current market conditions.
All you need to do to value any other auto body and collision repair business is compare it against such recent sales. To make the comparison work, you can calculate the valuation multiples that relate the business selling prices to their key financials such as revenue, profits, or assets.
Example: Valuation of an auto body shop using multiples
One common measure of business value in this auto services industry is in relation to its annual revenue. To show how this valuation works, we pick a typical company with $1,000,000 in annual sales and inventory of $250,000.
For our valuation calculations we choose these valuation multiples:
|Multiple||Multiple value||Business value|
|Average Business Value||$705,475|
Note that the results in the table include the addition of inventory once the valuation multiple has been applied. This is the usual way to value auto service companies. If you want to see the figures less inventory, just subtract $250,000 from the results above.