Case 2 of 3
Auto repair shop, leased building
Difficulty
A six-bay independent auto repair shop in a first-ring suburb: $1.6M revenue, $420K SDE, asking $1.3M. Four ASE-certified techs, all there five years or more; the owner runs the front counter and has a manager ready to step up. The shop leases the building at $6,500 a month; comparable bay space in the area goes for about $10,000. Three years remain on the lease with no renewal option. The landlord owns the parcel outright and has been approached twice by a developer assembling the corner. The buyer is financing with a ten-year SBA note.
1. Which issue most threatens the value of this business after close?
2. The shop pays $6,500 a month for space comparable buildings rent for $10,000. What does that mean for the earnings you're buying?
0 / 2000
3. How would you handle the lease in your offer?
0 / 2000