Dru and Perth Business Broker Glenn Prunster recently had a conversation about key considerations when selling a panel beating business. Some important takeaways for prospective sellers were:

Important Consideration – Insurance Contracts

Insurance contracts can be attractive for acquirers as it close to locks in future revenue from their investment. However the revenue from insurance work tends to have less margin. When appraising a panel beating business, this revenue split is one of the first things Glenn looks at. It is important to have this breakdown clear for prospective acquirers too to speed up their decision making process. Typically buyers are most attracted to a split of insurance and non-insurance work. This way they have some security from insurance work and some upside from other work.

Sale Price Maximisation – Condition Of Equipment

Being expensive to replace, buyers take good stock of the age and condition of spray booths and heating systems when assessing panel and paint operations. For this reason, it is in a sellers best interest to ensure that their equipment is in the best shape possible before going to market.

Important Consideration – Staff

A major challenge for all panel beating businesses is attracting and retaining qualified staff. They aren’t a lot of apprentices coming through so it’s a tight labour market. For this reason, a major motivation for an industry buyer is acquiring talent. They are looking for as big a team as possible where there is a track record of great culture which is evident in staff retention rates.

Important Consideration – Premises

Most times an acquirer is not looking to relocate an operation after acquisition. They want to continue to where the business is well known. For this reason, they assess the location. They want to see a long lease if it’s a leasehold and a premises that is a decent size and has room for growth. Wrecks parked out on the streets surrounding a business is not a good look so locations that have a large parking area tend to sell for a premium. Undercover parking is more preferable again.

Buyer Profile & Demand

The typical buyer for independent paint and panel shops is one of the bigger industry players like AMA Group and Car Craft Group who have been consolidating the market over the past decade. Buyer demand remains strong with quality panel beating operations attracting buyers and transacting within a slightly less than average amount of time in comparison to other industries.

Do you have a panel beating business that you’re contemplating bringing to market? It would be great to hear from you to see if we may be able to help. Please book a complementary and confidential discussion here to start the process.