Looking to Sell Your Business? Don’t Disqualify Potential Buyers Who Would Make Great Owners
In a career spanning over 30 years of working in the automotive aftermarket industry, I have often heard reference to the misperception that only veterans of our industry can successfully own and run automotive service shops.
In fact, as baby boomers now ready to retire have created a surge of businesses that are primed to change hands, that misperception, widely held by so many shop owners, has evolved into a misstatement of fact masquerading as the unquestioned truth…or in other words, a myth.
I have facts to debunk that myth, based upon my sales of over 40 automotive service business in the last three years. Of those 40 transactions, involving a balance of independent and franchised shops, only 24% of the buyers had prior working experience in an automotive business. That’s right, only one in four buyers were from the industry and 76% of the buyers were from another industry.
Consequences of Believing the Myth
Why are those numbers so significant to a shop owner considering the sale of his business? There are several reasons.
First, if a seller tries to sell their business themselves without using a business broker, they might very well pre-judge and prematurely disqualify buyers without automotive experience, thus dramatically reducing their buyer pool of potential candidates.
To further complicate that scenario, a seller who engages a general business broker without automotive background may influence the broker to believe the myth as well. The broker may not know any better and, as a result, also limit the buyer pool of candidates to only those with automotive experience. The myth spreads!
Having a real sense of who your potential buyers might be is a key ingredient to selling your shop in a timely manner to a qualified buyer and maximizing your sale price. Limiting the number of qualified candidates because of a myth hampers that process.
Additionally, qualifying for a bank/SBA loan for the purchase of an automotive service business does not necessarily hang on whether or not the buyer has previous industry experience. In fact, in prioritizing the relevance of industry experience, there are many more significant factors that contribute to a much greater degree to the successful qualification for a loan, such as having the financial liquidity and net worth to satisfy the bank and SBA. In fact, I will be exploring those factors in a future article here in Shop Owner magazine.
So the fact is that the 76% of buyers I’ve worked with from outside the aftermarket brought to the table their own excellent business, marketing and customer relationship skills, along with entrepreneurial zeal and drive that made them poised to successfully take over shop ownership. In fact, an individual with that skillset can oftentimes be more successful than a buyer with technician or service advisor skills who has never owned a business or handled the financial aspects of operating a business along with the myriad of other management responsibilities placed upon an owner.
I would like to share just a few of the many shining examples of new shop owners who have successfully migrated from other industries to the automotive aftermarket:
