Car Wash - Summer 2015 - (Page 49)

what's it reallY worth? 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 | 49

Table of Contents for the Digital Edition of Car Wash - Summer 2015

Letter From the Ica
By the Numbers
Overheard Online
Chip and Pi N Confusion?
New Techniques for Reducing the Ever-Increasing Costs of Health Care
The Car Wash Show 2015
Planning for Disaster
Motoring Ahead
What’s It Really Worth?
Wearing Too Many Hats?
Take a Tour
Wash Ideas
The Orgin of the Exterior Car Wash
Blast From the Past
Marketing Minute
Ask Champ
Download It!
Index of Advertisers
Focus on the Member

Car Wash - Summer 2015