How to sell an auto repair shop in Canada, and what it is worth

Independent auto repair and collision shops in Canada typically sell for 2.5 to 4.5 times adjusted earnings, less half a turn where earnings are under $500,000. A shop whose revenue comes mostly from repeat customers lands near the top, and one that depends on a single fleet account lands lower. Licensed technicians who stay then carry much of the value.

What an auto repair shop sells for in Canada

If you plan to sell an auto repair shop in Canada, the first figure to know is the range buyers pay. The automotive row of our table, which runs from repair and collision shops to dealerships, sits at 2.5 to 4.5 times adjusted earnings, and the full table by industry sets it beside every other sector.

Adjusted earnings are the profit with the owner’s salary and personal costs added back, the measure explained in SDE or EBITDA. Franchised dealerships are usually priced another way, on a goodwill figure called blue sky plus inventory and equipment at cost. This piece covers independent repair and collision shops.

Size matters a great deal at this scale. A shop earning under $500,000 meets a buyer pool made up mostly of individuals, and our engine takes 0.5 off the multiple at that level.

One shop, priced three ways

Take, as an illustration, an independent shop with $450,000 of adjusted earnings. The technicians and the bays stay the same in each version. Only the customer base changes.

The top of the third row is $360,000 above the top of the second, for the same earnings. Growing adjusted earnings past $500,000 would remove the size discount as well, which on these figures is worth another $225,000 or more.

Technicians and licensed trades

In Ontario, Automotive Service Technician is a compulsory trade, known by its code 310S. Anyone working in it must hold a Certificate of Qualification or be in a registered apprenticeship, and appear on Skilled Trades Ontario’s public register. It is also a Red Seal trade, the interprovincial standard.

A buyer can check each of your technicians on that register, and will. The certificate belongs to the technician, so what the buyer is paying for is the licensed people who stay after closing. Where you are the senior licensed technician yourself, train or hire your replacement in the year before. Other provinces run their own trade rules through their apprenticeship authorities.

Keep a list of technicians with their certificates and start dates. What buyers usually do with staff after a sale is covered in what happens to your employees.

The lease and the environmental file

Where the shop rents its bays, the lease is part of what is being sold. A buyer’s lender will look at the years remaining with renewals. Read the assignment clause before going to market, since it sets whether the landlord must consent to a new tenant, and a share sale can trigger a change of control clause in the same lease. The lease weighs even more in a restaurant sale, where it often carries most of the value.

Used oil is the environmental item particular to a garage. In Ontario, wastes from servicing vehicles at a garage open to the public, including used lubricating oil and waste antifreeze, are excluded from the province’s generator registration. Under the ministry’s registration guidance, the exclusion holds only where the shop has a valid written agreement with a waste hauler approved to take it away.

That agreement is a document to have in the file, with the hauler’s pickup records beside it. A garage that exists to service its owner’s own fleet falls outside the exclusion. Where the shop owns its land, expect the buyer’s lender to ask for a Phase I environmental site assessment, described in selling a manufacturing business.

Fleet accounts, insurers and repeat customers

A fleet account brings steady work and a concentration question. Once one account is over 30 percent of revenue, our engine takes 0.35 off the multiple, and customer concentration in a business sale covers how buyers protect themselves, usually with an earnout tied to the account. A written service agreement with the fleet, with a renewal date, helps.

Collision shops often depend on an insurer’s direct repair program, which sends claims to shops the insurer has approved. The insurer grants that place, so a buyer will ask how each program would treat new owners.

Repeat retail customers carry much of an independent shop’s value. Visit histories from your shop management system turn that into a number a buyer can check, which is what earns the 0.3 our engine adds for repeat revenue.

Who buys repair and collision shops

At the smaller end, buyers include licensed technicians buying their first shop, usually with a bank loan and a vendor note. Nearby shops bid too, because your customers cost them less to serve. Who buys Canadian businesses describes each group.

Collision repair also has consolidators. Boyd Group Services operates in Canada as Boyd Autobody & Glass and Assured Automotive. Its site lists more than 1,300 collision locations across the United States and Canada, with a contact for owners who want to sell.

In an asset sale, a buyer may be able to write off lifts and diagnostic equipment in the first year under the proposed Productivity Mega Deduction. How that shapes the split of the price is set out in the Mega Deduction in an asset sale.

What to prepare in the year before

1. 01List every technician with their certificate number and start date, and confirm each appears on the provincial register.
2. 02Read the lease for its remaining term and its assignment clause, and open the conversation with the landlord early.
3. 03Put the used oil and waste agreement with your hauler in the file, with a year of pickup records.
4. 04Move fleet customers onto written service agreements with renewal dates.
5. 05Pull visit histories from your shop system to show how much revenue comes from returning customers.

Changes like these take about a year to show in the statements a buyer reads, the reason preparing a business for sale starts early. For a first range on your own figures, the Quick AI valuation takes a few minutes and asks for your name only if you choose to save it.

The buyers, due diligence priorities and sector requirements are set out on InvestDeal’s automotive M&A advisory page.

Questions owners ask

What is an auto repair shop worth in Canada?

Typically 2.5 to 4.5 times adjusted earnings, which is profit with the owner’s salary and personal costs added back. Below $500,000 of earnings the range our engine applies falls by half a turn, so a shop earning $450,000 with a normal customer mix would fall between about $900,000 and $1.8 million.

Do my technicians’ licences transfer to the buyer?

The certificate belongs to the technician. In Ontario, Automotive Service Technician (310S) is a compulsory trade, and anyone working in it must hold a Certificate of Qualification or be in a registered apprenticeship and appear on Skilled Trades Ontario’s public register, which a buyer can check name by name.

What environmental records does a buyer of a garage ask for?

In Ontario, used oil and other wastes from servicing vehicles at a garage open to the public are excluded from the province’s generator registration when the shop has a valid written agreement with an approved waste hauler. A buyer will ask for that agreement and the pickup records, and for a Phase I assessment where the shop owns its land.

Who buys auto repair and collision shops in Canada?

At the smaller end, licensed technicians buy their first shop, and nearby competitors bid because your customers cost them less to serve. In collision repair, Boyd Group Services operates in Canada as Boyd Autobody & Glass and Assured Automotive and lists more than 1,300 collision locations across the United States and Canada.