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Al, I believe you’ve made a good decision in wanting to buy an automobile mechanical repair business. I have opened, grown, and sold a dozen auto related businesses over the years. I’ve also bought a few that were existing businesses.
The best advice I can give is to be thorough in your due diligence. Read the lease terms carefully, speak to the landlord, review payroll dating back at least a year to make sure the exiting operator hasn’t given his employees a raise in anticipation of his exit, interview the major suppliers and review parts purchase history, have the seller leave a small amount of funds in escrow for warranty repairs/come backs related to his/her ownership, tactfully terminate and rehire key employees and have them sign/acknowledge your policies that might be slightly different than what they’ve grown accustom to.
As for the net profit??? Hmmm . . . that sounds a bit off. The labor costs related to techs will be job-based but in round numbers, a shop that does $750K in sales has a gross of $375K. The technician labor costs, cost of parts, and sublet ops cost are already accounted for so deduct all the other expenses from $375K and see what you come up with. Rent, insurance, payroll taxes, and advertising will be big numbers. And, a manager that is running a $750K operation likely makes between $60-75K. After the manager expense there’s only $100K or so left over IF the seller is really netting $200K. Create your own performa based on known numbers.
Anyway, good luck to you. Never discount your oil changes . . . that’s a mistake.
