Valuing a Tire Dealership
The tire dealership industry experienced adversity over the past several years. This is partially due to travel restrictions spurred by the 2020 pandemic. An IBIS World report predicts that these negative trends will reverse in the coming years. With economic improvement, we can expect a steady increase in revenue for tire dealers in the US. Additionally, we are seeing an increase in consumer spending and the price of rubber. These determinants play an important role in the value of a tire dealership. For those looking to buy a tire dealership, there is a high revenue growth opportunity. If you are looking to sell a tire dealership, this industry has seen an increase in merger and acquisition activity. With proper guidance, you can sell or buy a tire dealership for the best price. Whether entering or exiting the industry, it is important to learn the principles of valuing a tire dealership.
There are many factors to consider when valuing a tire dealership. Peak Business Valuation, business appraiser, values tire dealerships often. Whether you are buying, growing, or selling, a business appraisal from Peak can help you maximize the value of a tire dealership. During a valuation, an expert assesses the strengths and weaknesses of your business. In addition, you will learn the fair market value of a tire dealership.
In this article, we highlight a few success factors a business appraiser considers as they are valuing a tire dealership. This is only a guide. For specific information, receive a business valuation for a tire dealership. Peak Business Valuation, business appraiser, is happy to help! Schedule a free consultation with us today!
Market Multiples for a Tire Dealership
Below, we list average valuation multiples for a tire dealership. A business appraiser uses valuation multiples when valuing a tire dealership. For more information read, Valuation Multiples for Tire Dealerships, How to Value a Tire Dealership, as well as Value Drivers for a Tire Dealership.
- SDE Multiple Average Range: 2.10x – 3.10x
- EBITDA Multiple Average Range: 2.68x – 4.89x
- Revenue Multiple Average Range: 0.27x – 0.49x
**Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
How to Value a Tire Dealership
There are various methods that an expert can use when valuing a tire dealership. This includes using multiples for a tire dealership. Most often, cash flow multiples – SDE and EBITDA are applicable. However, this can vary according to the expert and business valuation needs. When valuing a tire dealership, a business appraiser will use their expertise to determine what is best.
To find success in this industry, it is important to understand how to value a tire dealership. This is true whether you are buying, growing, or selling a tire dealership. In the following paragraphs, we share success factors for a tire dealership. With professional guidance, these success factors can help increase the value of a tire dealership. To learn more about valuing a tire dealership, receive a business valuation. Peak Business Valuation, business appraiser, is happy to provide a business valuation for a tire dealership. We can also answer any questions on valuing a tire dealership. Schedule a free consultation with Peak today!
Key Success Factors
Peak Business Valuation, business appraiser, values tire dealerships on a regular basis. We can help you understand the importance of the following success factors. With our guidance, these factors can increase the value of a tire dealership.
Product Mix & Inventory Management
One success factor that can help set a tire dealership apart is the product mix. To have a quality product mix, tire dealerships may consider the market trends. Understanding the market can help your dealership sell highly demanded products. This leads to an increase in sales revenue.
Additionally, tire dealerships should have effective inventory management. This helps prevent product shortages and surpluses. By having a quality product mix and good inventory management, tire dealerships can increase profits and minimize expenses. This has a significant effect on the value of a tire dealership. Peak Business Valuation, business appraiser, considers these factors when valuing a tire dealership.
Qualified Staff
Next, it is important to have well-trained and qualified staff. Competition in the tire dealership industry is reputation based. Hiring and training skilled employees ensures that customers will have a positive experience. Employees should have good product knowledge to help customers find what they need. If your tire dealership provides repair and maintenance services, it is important to have experienced mechanics. Achieving this success factor builds the reputation of a tire dealership. This promotes steady cash flow and word-of-mouth referrals. During a business valuation for a tire dealership, Peak can assess the quality of your staff. For questions schedule a free consultation with Peak Business Valuation today!
Additional Services and Service Bays
One of the best ways to maximize the value of a tire dealership is by adding additional services and service bays. The more service bays you have the more potential cars you can service a day. When a business appraiser is valuing a tire dealership, they analyze the number of service bays. They also assess revenue per customer transaction and operating margins compared to similar tire dealerships that recently sold. Maximizing each of these can increase the value of a tire dealership.
Location
Last, the location of a tire dealership is vital. To choose a good location, tire dealerships should consider the top markets. Currently, middle and high-income consumers contribute the most revenue. To reach these markets, it is best to locate in dense populations with a high vehicle count. It is also important to avoid areas where consumers rely on public transportation. Taking these measures can increase the demand for your tire dealership. Peak Business Valuation, business appraiser, analyzes location when valuing a tire dealership. A high-traffic location in an affluent area can increase the value of a tire dealership.
Summary
These success factors can help your tire dealership succeed in this competitive industry. However, there are many other factors to consider when valuing a tire dealership. Whether you are buying, growing, or selling a tire dealership, it is important to understand how to value a tire dealership. To start, obtain a business valuation for a tire dealership. As part of a valuation, you will learn the fair market value of a tire dealership. For more information see Value Drivers for a Tire Dealership.
As a business appraiser, Peak Business Valuation provides business appraisals for tire dealerships across the country. If you have any questions about how to value a tire dealership, we are happy to help! Schedule a free consultation with Peak Business Valuation today!
