Key Considerations for Selling Your Collision Repair Business
The Collision Industry Conference (CIC) in Las Vegas during SEMA week brought together a panel of consultants involved in mergers and acquisitions within the industry to discuss the topic of consolidation. One of the panelists, John Walcher of Veritas Advisors, shared some key insights for collision repair business owners looking to sell their businesses.
Walcher emphasized the importance of being able to take a vacation as a sign that a business owner might be ready to sell. He suggested that owners should be able to step away from their business for at least two to three weeks, including a full payroll cycle, to demonstrate readiness for a sale. Additionally, he highlighted the significance of the shop’s corporate structure and advised owners to plan ahead, as certain structures may impact taxation and require time to optimize before a sale.
When it comes to valuing a business, Walcher cautioned against relying solely on multiples of EBITDA and recommended considering multiples of annual revenues for a more accurate comparison. He also stressed the importance of building and retaining a strong management team and production team, as buyers are ultimately investing in the people behind the business.
The panelists discussed the potential challenges of staff turnover post-sale, with some noting that as much as 50% of employees may leave within months of a sale. Strategies such as retention bonuses and cultural alignment were suggested to mitigate turnover and ensure a smooth transition for employees. The emotional aspect of selling a business was also highlighted, with panelists acknowledging the personal attachment owners may have to their businesses and the importance of finding a buyer who shares their values.
Overall, the panel provided valuable insights and advice for collision repair business owners considering a sale, emphasizing the need for careful planning, strong leadership, and a focus on building a sustainable and successful business that can thrive under new ownership.