Buying a garage that's already trading gets you customers, staff and equipment from day one, which can be faster and safer than starting from nothing. It can also mean paying for a customer list that leaves with the old owner, a lease with two years left on it, or a contaminated forecourt. Here's what to check before you sign, in the order you'll need to check it.
What a garage business is usually worth
Small garages usually sell for a multiple of their yearly profit, plus the value of equipment and stock. The multiple is often somewhere between 1 and 3 times, depending on how much the business relies on the current owner.
The key word is adjusted profit. Take the profit in the accounts, add back things that won't continue (the owner's car, one-off costs), then take off a fair wage for the work the owner does. If the owner works 55 hours a week on the tools and pays themselves very little, the business is worth much less than the accounts suggest, because you'll be the one doing those 55 hours.
The money: what to ask for
- Three years of accounts and the latest management figures. Look for the trend, not just the last year.
- VAT returns, if the garage is registered. They're hard to fake and show takings quarter by quarter.
- A breakdown of takings: labour, parts, MOT, tyres, trade and private. A garage where one fleet customer is 40% of the work is risky.
- Money owed to and by the business. In most small sales, debts stay with the seller, but check who collects what's owed.
- Records from the garage system. Job counts, average invoice and how many customers came back last year. If the records are on paper, that tells you something too.
Our guide to the five numbers that show if a garage is profitable works just as well on a garage you're thinking of buying.
The premises: where most problems hide
| Check | Why it matters |
|---|---|
| Years left on the lease | You need long enough to earn back what you paid. Under 5 years is a warning sign |
| Can the lease be passed to you? | Most need the landlord's consent. Ask early |
| Rent reviews and repair clauses | A big rent review or a repairs bill at the end of the lease can wipe out the profit |
| Planning use (usually B2) | Without it, the council could stop the business |
| Ground contamination | Decades of oil and fuel can mean a big clean-up bill. Ask about old fuel tanks |
| Interceptors and drains | Check they're maintained and the paperwork exists |
Get a solicitor who knows commercial leases. It's the best money you'll spend in the whole purchase.
Equipment and the MOT bay
- Ask for an equipment list with age and condition, and say what's included in the price.
- Check lift inspection reports. Lifts need a thorough LOLER examination every 6 months. Missing reports may mean missing inspections.
- Find out what's on finance or lease. Leased equipment may need settling or transferring. It isn't the seller's to sell.
- MOT approval doesn't pass to you. The site's MOT approval belongs to the current owner as Authorised Examiner. You'll need to apply for your own, with a trained AEDM and qualified testers. Talk to DVSA early so testing doesn't stop on handover day. Read preparing for a DVSA site visit to see what they check.
- Diagnostic software subscriptions are often tied to the owner's account. Check what transfers.
Staff and customers
Staff: when you buy a business as a going concern, the employees usually transfer to you on their existing terms under TUPE, including their years of service. Get a list of everyone, their pay, contracts and any disputes. Find out who the key technician is, and whether they're staying. A garage whose best technician leaves the week after the sale is a different business.
Customers: loyalty is often to the person, not the name over the door. Ask the seller to stay on for a handover period, introduce you to trade customers and stay out of the area afterwards. A non-compete clause in the sale agreement protects you.
The customer list, vehicle history and MOT due dates can usually come with the business as part of the sale. Check the data can be exported from the seller's system before you sign. Without the MOT due dates, you can't send the reminders that bring customers back.
Your first 90 days
- Keep everything familiar. Same staff, same opening hours, same phone number. Customers notice change before they notice improvement.
- Get the systems in. Move the customer list and MOT dates into your own software and switch on reminders straight away.
- Check the prices. Many retiring owners haven't put prices up for years. Work out your real rate with the labour rate calculator and raise prices gradually.
- Ask for reviews. A run of new Google reviews tells local customers the garage is in good hands.
Weighing it up against starting from scratch? See how much it costs to open a garage in the UK.
Autex can import the customer list, vehicles and MOT dates from most garage systems and spreadsheets, so the reminders keep going from your first day as owner. Talk to us before completion and we'll plan the move with you.