IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Jeffrey Bryan. Mr. Bryan is Director of Operations for IBA’s Auto & Boat Repair Industry Transaction Group (www.ibainc.com):
Seven Factors Impacting Successful Exit Strategies from Auto Repair Business Ownership
IBA has been successfully facilitating the sale of auto repair, transportation, and commercial marine & pleasure craft companies in Washington & Oregon since 1975, the following are seven market dynamics from recent auto repair transactions facilitated by IBA’s team serving this sector, which I have led since 2007.
#7) HAVING SYSTEMS IN PLACE ADDS VALUE AND INCREASES STREET APPEAL
Increased customer traffic (RO counts) through proactive maintenance programs: oil change reminders, tire and brake service programs, and vehicle walk arounds to suggest future maintenance. Active programs that track each mechanics efficiency and productive output are valuable sales tools to allow General Managers to drive profitability and repair order margins. ShopMonkey and AutoLeap are two common Auto Repair Shop management systems that help track mechanic optimization, remind customers about maintenance, and drive overall shop productivity. Other programs like Mitchell can help guide mechanics through common vehicle specific repair procedures and individual vehicle flaws that can trigger check engine lights. The reality is that shops that have systems in place are more transferable, and command higher values. In a recent transaction https://caseysindependentauto.com acquired Longview Auto and Tire https://longviewautotire.com and NW Auto Specialists https://northwestautospecialist.com in a two-shop deal with real estate. A major factor in the Sellers’ decision to select Casey from a pool of qualified buyers was the fact that both shops high efficiency and profitability was based on Tekmetrics shop management software. Integrations of the shops into Casey’s Independent’s suite of companies would be a natural fit for both management and mechanics.
#6) REAL ESTATE: OWNERSHIP or LEASING WILL IMPACT YOUR EXIT STRATEGY
If you are lucky enough to own your real estate the good news is: You control your own destiny, there’s no landlord to overplay his hand at closing. I have personally had many “run ins” with over zealous landlords. On one such occasion buyer and seller had agreed to remove inground hoists and the buyer was going to incur the expense (~$300K) to replace the hoists with modern above ground technology. The landlord would not bear the cost/ liability of removal and squashed the lease assignment. He insisted the tenant was responsible for removal even though the tenant leased the facility 20+ years prior with hoists in the ground. Inground hoists are a likely potential environmental hazard often leaking hydraulic fluid under the building.
In another transaction, the Seller I represented owned his real estate, but the land was adjacent to Link Light Rail and the value far exceeded the business’s ability to afford that real estate. My seller thought he might have to shutter the business his father has started decades earlier Len’s Automotive https://ibainc.com/blog/nesha-ruther/the-story-of-ken-mattson-lens-automotive/ Instead after we found our buyer, we extended them a sweetheart lease, guaranteed 10-years minimum at the location to recoup their investment. Probably one of the most common questions I am asked by business owners that own their real estate, “Do I sell or lease the real estate?” My preference is to let the market decide! When we market the package, we really market the business. Offering the real estate “For Sale or Lease” attracts two sets of buyers (buyers that can afford the whole package, and those that can only afford the business). More often than not (60%/40%) the buyer ends up buying the real estate. There can be other benefits like 25-year amortization on an SBA loan and the ability to slide value to either real estate or business for tax purposes.
#5) MOST TRANSACTIONS WILL INVOLVE COMMERCIAL LENDING
Many small business transactions are financed with SBA lending. SBA backing gives the bank protection from borrower default up to 80% of the loan value. Sounds like a pretty sweet deal for the bank, right? Here’s what they banks don’t tell you, they have to be sticklers to the SBA paperwork process or risk lack of coverage in a default. Dotting “I’s” and crossing “T’s” has never been more important. Make your transaction bankable. What does this mean? It means your books and records must match the business and can withstand the scrutiny of a SBA Lender looking at tax returns, profit and loss statements, balance sheets and bank statements. Transactions over $3,000,000 will now require a Quality of Earning Report (https://ibainc.com/blog/pete-miller/sba-introduces-quality-of-earnings-requirement-for-larger-acquisition-loans/), this means a third-party assessment will be made whether the business has repeatable earnings, and the business’s cash flow into bank accounts matches the bookkeeping/ records of the business.
#4) PROFITABLITY MATTERS
Advanced Diagnostic and repair capabilities – diagnosing and fixing electrical systems and check engine lights continues to set the market performers apart from the average shop. Maintenance; wear and tear repair is consistently higher profit margins than heavy wrenching repairs like Engine and Transmission Swaps. A $10,000 engine replacement can often tie up a talented mechanic for a week or more with limited ability to charge adequate shop markups (25-30% GP) because the components already make the repair expensive. Meanwhile to same tech can complete 8-10 less complex maintenance and diagnostic repairs average 50-60% gross profit. Wheel alignments, tire work and brake jobs boast good solid 30% to 40% margins. Tax Returns and bookkeeping should be scrubbed of any personal life expense. Yes, that Seahawks or Mariners tickets you expense, but never take a client, or Costco trips routinely run though the business can cost you significant dollars at time of sale (https://ibainc.com/blog/gregory-kovsky/valuation-101-for-the-sale-or-purchase-of-a-business-ebitda-times-a-multiple/).
#3) PICKING YOUR LEGAL REPRESENTATION
Buyer and seller both need quality M & A attorneys in an auto repair business purchase & sale transaction. This is not a job for your run of the mill contracts, labor law, or divorce attorney. Business Brokerage/ M & A attorneys are generally specialists, meaning it’s the majority of what they do as an attorney. On occasion we have a general business attorney that has been with a family business for years with the knowledge & experience necessary to get a transaction to closing. It can also be an expensive choice to have an attorney learn a discipline that is unknown to them on the client’s dime. In a deal down in Gresham, Oregon for the business and real estate sale of TransMedic Transmissions https://www.greshamtransmedic.com my clients were referred to a Labor Attorney. He began running rough shot over our deal, insisting that he be present at every meeting with potential buyers, between myself and the sellers, he then asked for me to forward all of my files for the business, like he was doing discovery for a case trial. I found his resume on Legal Zoom and it said nothing about expertise in M&A or Business Brokerage. I called my sellers and appealed to their common sense. Doesn’t it seem strange he wants to meet all of our buyers? How strange would it be for buyers to walk into an Operations Meeting, and be introduced to the sellers’ attorney. Might give the buyer pause, that they are lawyering up just to introduce buyers to the business? And then there’s the financial aspect, attorneys charge $450-550/ hour, so meeting the 14 buyers for 2 hours each would have quickly added up to $30,000 or more. Needless-to-say we found better legal representation for our clients, and the rest of the story had a fantastic outcome. IBA is always happy to refer competent legal representation to both buyer and seller in transactions. We typically give referrals of 3-4 attorneys that have completed transactions with us. It can be common practice by attorneys to pick legal battles and argue over details of deals, IBA prefers to foster a collaborative environment between buyer and seller’s attorneys. Call or email me if you would like a referral to an attorney familiar with market terms & conditions for auto repair space transactions.
#2) KNOW THE VALUE METRICS OF YOUR SHOP AND FIND WAYS TO DRIVE YOUR VALUE HIGHER
IBA business brokers often begin working with business owners’ months to years prior to a sale. Our services begin with an onsite consultation visit, then we conduct a business and real estate evaluation. IBA performs the complimentary business evaluation to assess market readiness and give the Seller a range of value. Where the business sells in that range will be determined by market interest in the business. If priced correctly, businesses have been selling consistently at IBA in 2025 & 2026 despites the turbulence in the economy. Strong businesses sell in good and bad markets. Not every business IBA evaluates is immediately ready to sell. Some need a good CPA to help “clean up the books”, others may have had a down year in their last tax return, and they need to get the most recent year’s tax return complete, so the year before matters less. One of my transactions in 2025 was Dick’s Point S Tires of Battle Ground https://www.pointstire.com/battleground/ Dick’s Tire Factory was a third-generation business and it is a money printing machine with the busiest two-lane lube bay in Clark County, full service and coin-op car washes, tire & chassis service and a gas station. Family ownership consulted IBA 18 months before the decision was made to bring the business to market. We discussed the business and real estate values, “it was not enough and they were still having fun” running the businesses, said the family. Knowing the metrics they completed the calendar year and we updated our evaluation. The value had risen almost a million dollars, but they were still having fun and decided to keep going. Six months later, I received a phone call and we updated the Evaluation and the needle had moved $500K higher, but more importantly the enjoyment for running the business was diminishing. It was time to sell, by knowing their metrics the owners raised the value by $1,450,000 and made another year and a half of Seller Discretionary Earnings SDE.
#1) PICK YOUR BROKER WISELY
You will likely spend the better part the next year interacting with your M & A Broker. It takes time to discretely market the business: find the right buyer, agree upon terms, LOI, negotiate deal structure (asset or stock sale), tax structure, negotiate transactional documents (PSA’s, SPA’s and RESPAs), conduct inspections (building, equipment and environmental), get the buyer through Due Diligence and Bank Financing, escrow, get both sides attorneys to YES, employees, close the deal, and post transaction transition training. We have seen deals happen in as little as 90 days, but you probably need to saddle up for 9-months to a year. Longer if the buyer we are looking for is a more specific demographic or the business location is outside a metro area. Sounds exhausting right? Not always, when you pick the right Business Broker many tasks and responsibilities will be delegated to their knowledgeable, experienced, skilled hands. You keep running your business, and we want you to run it at peak performance. Nothing will move a sale quicker than continued strong performance, or cool off a sale faster than sluggish sales or revenue. The best business brokers are like specialty fishing or hunting guides. If you hire the best broker based on knowledge, experience, and skill, they will know where to fish, what bait to use, and how to successfully get a trophy buyer into the boat.
If you have questions relating to the content of this article or the process associated with selling a business with or without real estate, Jeffrey Bryan would welcome the opportunity to talk with you. Mr. Bryan is licensed to sell businesses & real estate in both Washington and Oregon. Mr. Bryan joined IBA in 2007 and specializes in the sale of automotive, marine, and construction companies. Mr. Bryan can be reached at (425) 454-3052 and [email protected].
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, accounting, legal, and financial planning communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.