Business valuation mandate in the context of the sale of a car garage

Mandate description

The objective of the mission was to determine the fair economic value of the company prior to the transaction, based on a detailed analysis of operational performance, market prospects and the specificities of the dealership model.

The evaluation was part of a context of transfer of an independent business, combining wealth, financial and commercial issues.

The study looked at the activity of selling and maintaining vehicles, the contractual relationship with the manufacturer, the cost structure, as well as the recurring earning capacity.
Particular attention has been paid to the value of recurring customers And at the workshop profitability, essential elements in the sector's margin dynamics.

‍Key issues

The main challenges consisted of:

• Establishing a objective value reconciling the expectations of the seller and market conditions;
• identify the value drivers specific to the dealership model: loyalty, workshop/sales mix, resale potential;
• integrate the sectoral trends linked to the energy transition and the digitalization of the customer journey;
• and guarantee a methodological neutrality through a confidential negotiation process.

Approach and results

The evaluation mobilized several complementary approaches, in accordance with Swiss and international professional standards:

• The discounted cash flow method (DCF), based on the projection of future operational cash flows;
• The Market multiple method, based on a sample of comparable transactions in the automotive sector, with EBITDA multiples observed between 5.0× and 7.0× ;
• The yield method, based on the capitalization of adjusted earnings capacity;
• And the Practitioners' method, combining the return value and the substantial value from the restated financial statements.
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The conclusions made it possible to establish a range of defensible economic value, used as a basis for discussion in the context of transfer negotiations.

The mandate also highlighted the intangible value associated with commercial reputation and customer loyalty, determining factors in the formation of the final price.