Acquisition - Fully Automated Car Wash in Montana
Aug 1, 2023
Background:
Located in Montana, this well-established full-service car wash operation has carved its niche in the market. Apart from offering a full wash, it's equipped with a retail outlet which can potentially be a significant avenue for additional revenue.
Financial Breakdown:
Purchase:
Asking Price: The business was priced at $2,700,000.
Financing:
Seller Financing: The seller offered financing for 20% of the purchase price, equaling $540,000, at a 5% interest rate.
Bank Financing: The bank covered the remaining 80% or $2,160,000 at an 8.5% interest rate.
Interest Implications:
Seller Financing Interest (Annual): 5% of $540,000 equals $27,000.
Bank Financing Interest (Annual): 8.5% of $2,160,000 amounts to $183,600.
Cash Flow Analysis:
Annual Gross Cash Flow: $400,000
Total Annual Interest Payments: $27,000 (from seller) + $183,600 (from bank) = $210,600
Net Annual Cash Flow to Owner: $400,000 - $210,600 = $189,400
Monthly Cash Flow to Owner: $189,400 ÷ 12 = $15,783
About The Business:
Established in 1990, the car wash is a blend of automated and manual washing services, amplified by a strategically placed retail outlet.
The efficient 120-foot wash tunnel ensures operational savings and increased profitability.
It also houses 6 self-service vacuum stations and 4 self-service wash bays, which diversify its service offerings and revenue streams.
Potential Growth and Expansion:
Retail Outlet: A potential goldmine, the retail outlet can be stocked with car maintenance products, snacks, or other relevant items to draw in additional revenue.
Service Variety: Given its self and full-service offerings, a new owner could consider membership or loyalty programs to increase return visits.
Modernization: Investing in the latest car wash tech could streamline operations further, possibly improving the bottom line.
Seller Support: With favorable seller financing terms, this business offered a smooth transition period and reduced financial pressure.
Conclusion:
As someone entering the car wash industry in Montana, this business was a gem. With steady cash flow and a reasonable purchase price, it promised both immediate returns and ample opportunities for future growth. The monthly cash flow of approximately $15,783 underlines the stability and profitability of this venture.