Taking over a garage or car centre in 7 key steps

Taking over a garage or car centre in 7 key steps

Rather than dreaming it, you're going to do it, take over a car garage. Not only do you love mechanics, but you have the soul of a leader. You are brimming with ideas and you are particularly good at uniting a team around a common project. No doubt about it, you have the soul of a modern-day conqueror : the entrepreneur. Rather than creating your own company, you prefer to take over one. This is a wise choice, because taking over a garage has many advantages. The customer base is well established, the equipment and tools are in place and the mechanics know the business. However, your enthusiasm should not mask the reality. You won't become a garage owner overnight, without first building a credible and profitable project. Here are the 7 key steps to taking over a garage or auto centre with complete peace of mind.

#1 : preparing for the recovery

We won't teach you anything, but taking over a car garage has to be prepared in great detail and well in advance, at least between 12 and 18 months. There's no need to jump right into writing your business plan, you'll soon realise that you have a lot to do before you get there.

Emotional preparation

What we loosely refer to here as emotional readiness includes elements related to your personal aspirations and those of your family. Are you prepared to move if an opportunity arises far from your current place of residence ? How do your family and friends perceive this change of life ? How do you react to stress or conflict ? What kind of leader will you be ?

If you're in a conversion project, you must be looking forward to kicking the employee's ass and becoming the boss. Be careful that your dreams don't act like a steamroller on those of others...

The technical preparation

You won't just become a garage owner, you'll take on the role of a business owner. With all the good and bad that entails. Use your current free time to improve your skills : employment law, current events in the automotive sector, garage accounting, in short, there is no shortage of topics.

There are also training courses dedicated to takeovers. They provide support for project owners and present each stage of the takeover in detail.

The CCI offers training courses by region, quite often named « 5 days to resume». The association CRA, cédants et repreneurs d'affaires, trains and advises buyers with training courses and workshops organised throughout the territory. We strongly advise you to consult their website. Their training courses last between 2 days and 3 weeks. They are eligible for the CPF.

#2 : looking for a garage or car centre

Finding the rare pearl requires patience. Bpifrance estimated in 2020 that the takeover market was tight, due to a mismatch between supply and demand. Entrepreneurs are looking for companies with more than 10 employees, while 95% of those to be taken over have precisely less than 10.

This second step already forces you to get down to the nitty-gritty : do you want to be the boss of an independent garage or a car centre ? In the first case, you are alone at the head of your business, but with total freedom as to the choice of your strategy or products. Becoming a franchisee implies respecting a certain set of specifications, but provides appreciable support at all stages of your project, including the financing part.

For effective research, multiply the information acquisition channels :

  • the personal and professional network, especially if you are already an entrepreneur and member of a network;
  • opportunity exchanges and in particular from Bpifrance, the CRA, the CCI or FUSACQ which is a marketplace specialising in business takeovers and transfers;
  • transmission firms, if your financial means permit;
  • Direct approach, i.e. by going directly to the companies.

# 3 Choose the garage to be taken over

This stage consists of studying the offers that have caught your attention and conducting an initial analysis. The key point in this stage is time. You can quickly find yourself drowning in information and even more lost than before.

Bpifrance provides a diagnostic tool to guide your thinking. It will usefully complement other public information readily available on the internet.

# 4 Taking over a garage or car centre : meeting the seller

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Here's an important and exhilarating step : the meeting with the seller. Your thinking is now well underway and you will be able to tackle some very concrete and technical details. You will be able to visit the workshop, meet the employees and get a precise idea of the state of the infrastructure and equipment. Transparency is therefore the order of the day, both on your side and on the side of the person you are talking to.

Be aware that you are taking a kind of entrance exam. You are a candidate for the takeover, so don't expect to be welcomed like the messiah. You have to prove yourself, because a repair shop manager will not hand over his garage (and his employees) to the first person who comes along.

  • Prepare your interview so that your questions are relevant;
  • Listen to your interviewer, you have everything to learn from this company;
  • Evaluate the motivation and involvement of the transferor;
  • determine the progress of the transfer project. A garage owner who is selling his garage but has not yet prepared his support should alert you. He is probably not that much of a seller.

# 5 Determine a trade-in price

This step is extremely important. The accompaniment of a specialist lawyer or chartered accountant is therefore welcome as you need to study the assets and liabilities of the business in detail. Three methods prevail, the so-called patrimonial method (the garage is worth what it owns), the profitability method (the business is worth what it earns) and the comparative method. The company is then valued by comparing it to others.

Once you have estimated a price, you write a letter of intent to be signed by your garage contact. This framework document outlines the takeover process and ensures you have exclusivity over the garage.

You should also be accompanied in conducting various audits, including confirming the veracity of the accounting documents submitted and ensuring that the car repair business is legally or economically sound.

#6 the business plan for your future garage

Here we are at last at the business plan stage ! It appears to be the iconic stage of a garage takeover, you may have noticed that it is not.

This document is used to obtain funding, you write it with the organisations you will approach for funding in mind. It contains a detailed market study and all the data relating to the growth and profitability of your future repair business. This part will be less difficult to write than for a start-up, as you have the advantage of having all the growth figures and a complete history.

#7 : financing the takeover of a repair shop

Financing, the nerve of the war. Don't expect to launch without a financial contribution, nobody will follow you and especially not the banks in the current context. Moreover, Bpifrance estimates that the norm in 2021 is 30% personal contribution for 70% borrowed funds.

From then on, it becomes vital to find funding. Here again, networks will be precious allies. Being accompanied by an association or network dedicated to business takeovers will undoubtedly increase your chances of obtaining a bank loan.

Here are some ways to consider getting financial help. You can also combine the various contributions :

  • Pôle Emploi's aid for business buyers;
  • Microcredit (up to €10,000) with ADIE;
  • a loan from Bpifrance, which is also a public investment bank and co-finances a bank loan;
  • the use of an organisation such as Monte Ta Franchise if you are planning to take over a car centre.

Build Your Franchise assists aspiring garage owners in putting together their dossier, preparing their business plan and obtaining financing. The investment fund supports future franchisees from A to Z and works regularly with brands such as Speedy or Midas for example.

So we have presented you with the 7 key steps to taking over a car garage. These various stages now take you through to signing the contract and then taking over your repair shop. You must now make the decisions for the smooth running of your business, while still benefiting from the sound advice of the transferor.

Posted on 05/10/2021 by PRO 0 234

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