What is my mechanic workshop worth?

A mechanic or automotive repair workshop is worth what its ongoing profit supports, adjusted for risk. The big questions are whether customers come back to the workshop or to one mechanic, how long the lease runs, whether qualified staff will stay, the condition of hoists and diagnostic gear, and any fleet or insurer work.

What is the short answer?

Your workshop is worth what its ongoing profit can support, adjusted for the risk that the profit will not continue. In a workshop, much of the risk sits with the lease, the mechanics and whether customers come back.

A valuer starts with the profit in your accounts. They then ask how much of it a new owner would keep. The Australian Government's guide to valuing your business lists customer loyalty and reputation as part of goodwill. It also notes that value can depend heavily on your industry.

A workshop has more equipment than many small businesses. But equipment alone does not set the value. Repeat customers who trust the workshop are what a buyer pays extra for.

What pushes the value of a workshop up or down?

Anything that makes repeat work more likely under a new owner tends to support value. Anything that ties the work to one person, or puts the premises at risk, tends to reduce it.

Repeat customers. Servicing brings cars back on a schedule. A workshop that sends reminders and keeps service history has income a buyer can see coming.

Equipment. Vehicles keep changing. A workshop that cannot service newer models, such as hybrid and electric vehicles, may face spending a buyer will allow for.

Lease. A workshop's hoists, pits and fit-out are costly to move. The lease is a core part of the value.

What add-backs and traps should I watch for?

Add-backs are costs added back to profit because a new owner would not have them. Each needs a reason and a record.

• Owner wages. If you work on the floor for a modest wage, a valuer deducts the cost of replacing your work.
• Private vehicles. Repairs on family cars or a private vehicle run through the business may be genuine add-backs, if records support them.
• Cash jobs. Income that is not in your accounts cannot be counted.
• Parts stock. Usually counted separately at its real worth. Obsolete parts may be worth little.
• Equipment finance. Usually deducted from the value of the business.
• Licences. In some states, a motor repair business needs a licence or registration. A buyer needs to know it can be held after the sale. Check with your state's fair trading body and your lawyer.
• Environmental issues. Oils, fluids and waste need proper handling. A buyer or landlord may ask about the condition of the site.

Which documents matter for a workshop?

Beyond your profit and loss, balance sheet and tax returns, a valuer will want records that show how steady the work is.

• Workshop software reports: jobs, repeat customers and revenue by type of work.
• The lease, any options to renew and the next rent review date.
• Any fleet, insurer or dealer arrangements, with their terms.
• A staff list with qualifications, pay and length of service.
• An equipment list, with ages, condition and any finance owing.
• A parts stocktake, and licence or registration details.

The government's checklist for buying an existing business asks what equipment and machinery the business owns, and whether it is in good working order. It also asks whether the landlord will agree to transfer the lease. Expect a buyer to ask both. See our full list of documents needed.

How can two similar workshops be worth different amounts?

This example is made up. Picture two workshops in the same area, with similar sales and similar reported profit.

In the first, the owner diagnoses and fixes most cars. A single fleet customer supplies a large share of the jobs. The lease ends soon with no option.

In the second, three qualified mechanics do the work. The owner runs the counter. Customers return on service reminders, and the lease has years left.

The second workshop would likely be worth more. Its profit does not rest on one person, one customer or a lease about to end. The first also needs a deduction for the owner's labour.

Which Valuo report fits my workshop?

Choose by who will read the report. If it is for your own planning, the Business Value Report fits. If a buyer, lender, investor or partner will rely on it, choose the Professional Valuation Report.

For revenue of $10 million or more, you receive a fixed fee quoted before any work starts. Your fee is set by revenue and report type, never by the value concluded.

Selling to a business partner or family member, or moving the workshop into a new structure? Talk to Oliver Group. For tax on a sale, speak to your accountant.

What should I do next?

• See your fee in two taps: Get your fixed fee.
• Compare both reports and every band: pricing.
• Read the general guide: how much is my business worth.
• Need finance for the sale or a purchase? Read valuation for a bank loan.

General educational information, not advice. Examples are hypothetical and do not value a real business. The right treatment depends on the purpose, the evidence and the agreed scope.