Car Wash - Summer 2015 - (Page 49)
ValUing a car wash can be comPlex
By Sandy Smith
an accoUntant bY training, Mike
North certainly has plenty of knowledge
of the numbers side of car washes. But
North, CEO of Oklahoma City-based
Okie Express Auto Wash, is perplexed by
how to properly value a car wash.
It's not that he doesn't have experience.
He's sold a child care firm and also a car
wash. The former was straightforward: Sell
the real estate and sell the operations in
two transactions. The car wash sale was
more of a lark; a buyer who wanted into
that market sought out the 9-month-old
wash, and North and his partners practically named their price.
While North found selling his child
care business to fit in with that industry's
norm - two transactions - valuing a car
wash has too many variables. It has become
more complex, too, as private equity firms
have purchased small and large chains in
the U.S. and the U.K. The world's largest
car wash - IMO - has changed hands
multiple times, while in the U.S., Mister
Car Wash went to a private equity firm.
"That's changed the dynamics, once a
big hitter with real money comes into the
industry," North said. "I believe it's going
to cause a feeding frenzy, and people who
have large amounts of equity in their car
washes are going to get out."
With so much confusion about how to
value a car wash, where does one start?
North, along with Gary Dennis, ICA
president and owner of eight car washes in
Georgia and Alabama, and business broker
Mark Doran, offered these tips:
1. Understand that what applies in
other businesses may not apply to yours.
"Numbers that are generally true to one
industry don't apply to another industry.
That may be due to the fact that the margin
structure of the investment of one industry is different," said Dennis, who comes
to the car wash industry with a banking
background. "You can't apply the exact
same principles to a software company as
something with hard assets. Car washes
have a different operating margin than
the grocery. There can be some nuances
specific to industries that are different, but
fundamentally, you're always getting back
to the way most valuations are derived."
Summer 2015 | car wash magazine | www.carwaSh.org
Table of Contents for the Digital Edition of Car Wash - Summer 2015
Letter From the Ica
By the Numbers
Chip and Pi N Confusion?
New Techniques for Reducing the Ever-Increasing Costs of Health Care
The Car Wash Show 2015
Planning for Disaster
What’s It Really Worth?
Wearing Too Many Hats?
Take a Tour
The Orgin of the Exterior Car Wash
Blast From the Past
Index of Advertisers
Focus on the Member
Car Wash - Summer 2015