Over the last 20 years, I have consulted for and watched as my friends and myself sold out to the consolidators. I’ve also given presentations at ARA conventions on what the consolidators are looking for and how to value your yard. At this year’s ARA convention in Dallas on November 12th at noon, I am speaking on “Succession, Sales and Yard Valuation.” I hope you can attend. Following is a summary of my presentation.
All of us are getting older and it’s happening at the same rate! Eventually, it will be time to hand your auto recycling operation to the kids, or sell it to them or to others. How do we value all this blood sweat and tears? The trickiest thing is the inventory value, but there are many other factors to consider, including tax consequences. Also, if you don’t have kids or obvious buyers, how do you find a buyer, and what can you expect to get from the sale of your business? Finally, how do you maximize your return and minimize taxes?
About that money truck!
What is the money truck? In the investment world, it’s the moment when the bank wire comes. Getting to the point when it is time to back up and unload the money truck is arduous, but, when you do, suddenly all the things you were arguing and negotiating for don’t seem to matter so much. You didn’t get the $200,000 back that you just spent on the new loader, but you did get $350,000 for the equipment you bought 20 years ago. Let’s keep it real. That new loader was only worth that to you and maybe to the operator. And now that you’ve closed, you smile and say to yourself that most of the equipment was pretty worn and you couldn’t have hoped to sell it for the amount you fought for.
How do you make the decision to start down the sales path? Will you give the kids some of the money? If you have no kids, the decision is much easier. You’ve been busting your ass for 20 years or more, and frankly, you’re tired, but you still love what you do. Most yards haven’t been tremendously profitable in any given year, but over time, the yards have made a small fortune. If you were a consulting client of mine, I advised you to invest and not to put all your eggs in one basket.
Of course, the single biggest part of selling the business is determining what …….