Key acquisitions considerations

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Shop owners looking to grow need to do their homework. A pair of coaches offered some expertise on what to think about during the process at a recent training event.

They need to figure out what kind of shop they want, such as specializations, what part of the city or region they want to be in, will they keep the same brand and more.

And don’t forget to look at the human capital in the shop, advised Greg Bunch, a speaker trainer with Transformers Institute, and multi-shop owner. The shop may have a husband and wife team running the business. After you buy, you’ll need to hire two people to take on those roles, so your cost of acquisition goes up.

Check in on the status of the technicians. Are they older, nearing retirement age? Or will you have techs working for you for many years?

Don’t forget, if staff catch the scent that the shop is for sale, they may fix up their resumes and look for new jobs. So you want to put in a strategy to retain the staff in place, Bunch said.

The shop’s reputation will be important to consider as well. Do you want to keep the name or do you want it under the same brand as your current shop? Some customers may be more comfortable with the feeling of walking into ABC Automotive because it has the feel of a family-owned shop. It may be part of a multi-shop operation but because it operates under a different name or the pre-acquisition name, customers don’t realize it.

Or do you just want the building, clear everything and everyone out and start from scratch?

“I would suggest that if you’re going to spend money for a business, make sure it’s got some good stuff that’s going to come along with it,” Bunch recommended at the Midwest Auto Care Alliance Vision Hi-Tech Training and Expo during the session Executing Successful Acquisitions.

If you have a shop that does general repair, do you want to take on a specialty shop, or vice versa?

“I have a lot of clients that own general repair and they want to subsidize that with a Euro shop because they’re turning away Euros. And I got Euro shops that are now opening general repair shops to go back and forth,” Bunch said. “They’re like, ‘Hey, for everybody that owns a BMW, you know that you got to have a spare car, right? And it better not be another BMW. And so they want to capture both [of those] markets, but they don’t want to pollute their parking lot by putting a poor little Toyota Camry next to their Mercedes.”

Another consideration is distance. How far apart should your shops be from each other?

Troy Kaplan, a senior consultant with Transformers Institute and owner of TGK Automotive, which has more than 20 locations, at first looked to keep shops about 10 km apart from each other. But he changed his thinking from a fixed distance to looking at drive time, to about 10-15 minutes.

Keep in mind the natural divisions in a city. Maybe there’s a bridge or river that separates one part from the other, so it’s OK to be a little closer because people may not travel to other parts of the city.

“If we can make it a shorter drive time from their house to or from their work was our goal,” Kaplan said.