Many smaller body shop owners have asked, ?How do I appraise my body shop?? In the last month I have been asked to do two appraisals on body shops. The first appraisal was to assist in partnership dissolution; the second appraisal was for marriage dissolution. (That is what the attorneys call a divorce.) Would you like to know how to appraise the value of a body shop business?
Before we begin, I would like to make one comment. Whenever a CPA has done an appraisal of a body shop, I find that their opinion of value is much greater than the actual value the market place will pay. This is not because the CPA?s do not know what they are doing because they do; it is just that the market place places a muuch higher risk on buying a body shop than the accountants do. The following is an excerpt from one of those appraisals.
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Paper CupsTHE THREE WAYS TO APPRAISE A BUSINESS
1. The ASSET VALUATION METHOD. This method is basically used when a body shop does less than $400,000 a year in gross income and the seller is making wages, but no real profit above what he would be paid if working for another. On this size business, a buyer is willing to pay for the assets of the business but little or nothing for goodwill. The equipment is usually worth between $50,000 and $100,000, depending on how many frame machines the business owns and how nice a spray booth the business owns.
I have seen some specialized shopps sell for more than the above number because they have a truck spray booth or another business attached to the main business. Examples of attached business might be an auto repair shop or towing operation. Also the location, size and real estate rental amount will influence the value of any business, to some degree.
2. The second method, I call the GROSS SALES METHOD. This is used when the sales are over $1,000,000 a year but the profit is unknown or financials are not available or reliable. Because of experience, a Body shop buyer can make reasonable estimates of future profits, if they have some basic information. The basic information includes rent, source of business (DRP, STREET, or a CAR RENTAL
Breed ApartI feel really sorry for my partner`s mum Carole at the moment. Her cat, Paddy has gone missing and I think it might be for good this time. He`s gone missing in the past but he always turned up a week or two later. This time it`s different. It`s now been a few months since Paddy first disappeared and I think deep down, we all know he`s not coming back. The subject of another cat has been mentioned but Carole has decided that she`s not getting any more. Therefore, I`ve decided to buy her a special type of gift in memory of her beloved pet. I`ve seen a collection of A
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