Dru recently had a discussion with Gold Coast Business Broker Brendan Morgan about selling a tyre business in Australia. Having taken part in a number of transactions in the tyre shop industry, Brendan had some great insights for prospective sellers:

Important Consideration – Franchise vs Independent

While all types of tyre shops can sell, different structures appeal to different buyer types. Franchise operations typically sell to inexperienced operators who are potentially getting into the industry for the first time. Independents meanwhile typically sell to more experienced operators or people who own multiple locations. Marketing campaigns needs to be tailored to either party to maximise success.

Sale Price Maximisation – Management Team

Bigger operations that go to market with a total investment price of over $1m AUD do much better when there is an established management team in place. Investors willing to part with this amount of money typically don’t wish to be part of day to day operations. Lower price point businesses come with an expectation that it will be an owner-operator arrangement, however will also become more attractive to the market if there is an experienced support team in place.

Sale Price Maximisation – Commercial Clientele

Tyre businesses that are considered highly attractive to the market and therefore sell for a higher price are those that come with established recurring commercial work from clients such as councils, airports or large local businesses. Buyers feel more confident that they will get a return on their investment with these relationships in place. They will however discount this if one client is responsible for more than 50% of sales which would make an acquisition too risky.

Contemplating taking your tyre company to market? Book a complementary consultation with an expert today.