Selling Your Carwash?
By: Roger A. Pencek
June 2005
The single most important factor in buying or building a car wash should be the ultimate "exit strategy". Now that takes all the "romance" out of your new venture! But, reality dictates that every "deal" should have an escape plan and the following information should be considered.
My 22 years of specializing in the sale of full service and self service car washes is "full of successes and failures". The wise business person plans for a sale like a cunning chess player. Every business move should be implemented with long term results which affect the value of the company. No matter the decision, there is no greater success of the business than "onsite ownership". This leadership is what dictates the "personality" and work ethic of the organization and sets an example to the workers of teamwork. The "exit strategy" is practiced daily by a consistent commitment to customer service (goodwill) and quality of the car wash each customer encounters every visit.
Every car wash develops this "personality" by the way it keeps the following elements in harmony; physical appearance of the wash, attitude of employees, quality of service, curing customer complaints, hours of operation, organization of books and records, yearly car wash passes, promotions, profit centers (tint, oil / lube / detail, window repair etc.), speed and quality of wash, just to mention a few. The sum of all these ingredients, whether a self service or full service, contribute to the hygiene of "goodwill" (reputation) of the wash. Buyers are attracted to high profit washes, with daily goodwill being practiced. This too is the invitation for a customer to return again and again. Your "exit strategy" is dependant upon your customers!
Car wash owners who are seasoned in the business will agree that today's car wash customer wants "more" for less "money"! The goal is to "satisfy customers with a quality car wash in a reasonable time for a practical price". Therefore, the owner must be a chameleon to pamper his customer and find a way to still generate a profit.
Well "what does all this public relations" have to do with the ultimate exit strategy & Selling Your Car Wash? Everything, because if the internal structure of the daily car wash systems are not in sync, the public will have a different experience each visit. Customers are the car wash Most Valuable Asset, for success and optimum value depends on their frequency.
Now on to the "paperwork" needed to be assembled for a buyer to review. To list a car wash for sale the "Golden Rule" that we at CWB Inc., in our 14 offices within the USA, is "packaging". Each car wash listing for sale is packaged and prepared for a Buyers muster. (Visit our web side: www.carwashbrokers.com which will go into greater detail). This is a partial list of items needed to assemble:
1. Sellers last three (3) years IRS Tax Returns (Re: Business)
2. Sellers last three (3) years P & L's
3. Last twelve (12) months rolling P & L's
4. "Recast" perks and EBITDA
5. Complete equipment list and personal property
6. Employee list with ADP or payroll information
Accumulating all the pertinent information into one concise "package" will keep the owner apprised as to the current value of the wash. This information acts as a daily log of the car wash and keeps all the history in a current profile. Most owners are great when it comes to appealing to the customer's needs, but the record keeping is one of the most neglected areas. Unfortunately, for them, buyers and bankers base their "values" when making offers on the records! All Records!
Whether an owner actually wants to sell their car wash or not, a current package with all the essential information regarding the car wash is Cheap Insurance. Let's be practical, health, unexpected early retirement, divorce, finance burdens, competition, weather conditions, zoning issues, all contribute to exit situations; often unexpectedly. When those circumstances "known or not" arrive, selling your car wash may be a greater shock than one expects. First of all scrambling to gather the paperwork so neglected and possibly not even available, is a wake up call & but what about that "unplanned" accumulated tax depreciation issue!!!
Obviously, planning for the exit as mentioned earlier, "mother time" has no warning and sellers should be prepared for that "exit" planned or unexpected. Here is a practical example: Seller has 1 to 4 car wash locations, and not interested in selling at present. Buyer comes along, unexpectedly offers to buy Sellers solo or multiple locations to gain market presence. Seller is not prepared to respond, items needed to put a "package" together are unavailable or too time consuming to prepare. Buyer is frustrated and assembles 1 to 3 competitors in the immediate car wash geographic market. Buyer is an experienced operator from out of state or consolidator. Buyer buys the competition and dominates the car wash trade in your area and ultimately gains your existing customer base with progressive marketing and advertising campaign, pricing and worse "pirate employees away from your site"!
The car wash profession is more sophisticated today than ever before. The car wash consolidator movement in the late 1998 & 2000 was the proof that car washing is a prime target for assembling and will no doubt return. Also, on a "mom and pop car wash" acquisition, solo buyers are also sophisticated and are driven to this market because of the "no receivables, no inventory and cash business ingredients". So preparation and planning on a daily basis is an essential aspect of the car wash operation and paramount to command the greatest value upon the "exit". The goal is to maximize the greatest value of your car wash that a buyer can be convinced of easily.
The daily goodwill of the business, accurate and accessible records, is the owner's greatest "Insurance Policy" to exit. The more these "car wash personality" issues are polished, no matter how great or poor the location, location, location of where the wash is, determines its value!!! Whether we at CWB Inc. package your car wash or you the owner keep these aforementioned accurate records accessible to be "packaged", it's these items which assembled properly contribute to the overall value of the wash. Absent complete information, buyers simply pass on the "deals" and go on to "easily read" businesses & wouldn't you? Cosmetics of the car wash and profit centers are all in the "mix" of the sale, but the greatest "acid test" a buyer makes is on the history of the wash.
We at CWB Inc have a multitude of registered buyers in our USA data base "Ready, Willing and Very Able" to purchase car washes & that's all we sell!! Our mission is to educate sellers as to the packaging process or on a more personal and complementary basis, help prepare sellers for that ultimate "exit", ready or not.
If ready - we'll list their wash for sale, provide a list all the information they need to provide us to complete a "package", customized to their special car wash. The whole purpose of the package in the exit strategy, is to keep the seller marketable and current. Once the information is in one complete package we can use our equations of value to validate an "opinion of value", which is an estimate of the washes market value. Now what would life be like without the attorneys input here?
Disclaimer: We at CWB, Inc. are not MAI Certified or in any way claim to be Certified Appraisers, nor purport to be experts in appraisals. Our "acid tests", "opinions of value" or "market value analysis" are estimates and purely based on our real estate expertise in listing and selling car washes.
In Summary: Self service car washes can be every bit sophisticated in an exit strategy as well as the more complex full service car washes. Especially when multiple self service locations are to be sold as a group of which we are no stranger to, exchanges (IRS Tax 1031), environmental issues, title policies, leases, supplier accounts, financing loans, allocation on sale, etc. these just to mention a few can be "Deal Breakers". The goal is keeping the "exit strategy" healthy, ready to implement and resolve obstacles before they destroy the deal.
The Buying Process: Once a buyer is interested through our marketing avenues, all of them sign a Confidentiality form. This confirms that only they and their assigns (CPA, Attorney and Banker) are privy to the seller's information. Once the buyer makes an "offer" and "acceptance" by the seller, the closing process takes about 60 to 90 days. This is predicated upon the financing, appraisals and general motivations of buyers and sellers to Close of Escrow. Pretty simple hah?? Not really, on average the "list to close" time period after all the information is package is about 2 to 6 months! The process of qualifying buyers, negotiating the deal, lenders motivation, appraisals and environmental issues and most or all ... keeping "peace" between buyer and seller is the magical result called a "Closing". Hence, my next article will be on "The Process of the Car Wash Closing". We will take the buyer and seller down the path of processing the listing to closing the escrow, (The Do's and Don'ts, Tears and Beers), with all the excitement and disappointments to "Close the Deal".
Note: Any articles authored by Roger A. Pencek are the expressed property of said author and only with expressed written permission will be allowed to be duplicated or used in any text manner.
