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Business Operations / Carwashing / Starting a carwash

How to value a carwash

January 01, 2013
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Full-service carwash values
Since 2008, there has been a severe 30 percent decline in the full-service carwash market value.* The person willing to spend $18 on a carwash customer is not washing as much. Some of these customers are even being slowly converted to the speed and economics of the evolving express wash.

There is one common way to determine a value: The income approach. In this way, a full-service wash would be valued on a multiple of its EBIDTA (earnings before interest, depreciation, taxes and amortization). Today, five to six times the amount of the EBIDTA is the reasonable multiplier contrary to the 1995-2008 cash cow days of eight to 12.

Read also: OSHA and your carwash

To establish the EBIDTA, take the total profit center’s (including the wash, detail center, possible quick lube or convenience store, etc.) yearly gross sales and multiply it by .33. In the event there is fuel at the site, take .08 cents per gallon and multiply it by the gross gallons pumped. Add this figure to the gross before you complete your equation.

There are a few variables to keep in mind, such as:

  • Competition;
  • Condition of equipment;
  • Site or absentee owner; and/or
  • Possibility of road construction.

These are just to name a few. Like all wash valuations, the wash has to have a history of books and records from at least three years or the reproduction approach has to be used.

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