“After thinking I should be doing a nationwide search to find the right buyer for my business, it took my broker Art Blumenthal to find the perfect candidate from my own hometown!”
–Jim Torres, Seller
“For a first time buyer, having a broker involved is definitely a plus. There’s an amazing amount of legwork involved to get the deal done and you need a guide.” –Joe Cunha, Buyer
Seller’s Background & Motivation to Sell
Jim Torres had owned a prominent auto service center in North Providence, RI, since 1983. Although still in good health and wanting to remain active in the automotive aftermarket in some capacity, he sought retirement from the daily grind of owning and operating a business.
Jim said, “I was a District Manager for Midas for a number of years before owning three auto service shops over a 28-year period. I was fairly successful and, over the years, I sold off two locations myself…one was to a partner with whom I was in partnership at a location, and the other location to another former Midas District Manager, who had actually approached me looking to buy a location. So, for the next 10 or 12 years I had just the one location in North Providence.”
Buyer’s Background & Motivation to Sell
Joe Cunha has a classic automotive service background.
Joe said, “I have 27 years of experience as an ASE-certified and factory trained Master Technician. I started off in 1985 as a technician and worked as an independent for nine years at local garages and gas stations. Then, I started with an Isuzu dealership in 1994 and worked there for four years. Then, I went to work for a Buick-Pontiac-GMC-Isuzu dealership for another four years and then for a Volvo dealership for eight years after that. Finally, I worked for a Lexus dealership for two years.”
When asked if there was a specific date that he decided to go into business for himself, Joe Cunha admitted that he always had the entrepreneurial spirit.
“I always wanted to run my own business from years back. Even when I was working for dealerships, I had a side business selling log home material packages when the housing market was good, so I had a taste of what it was all about to run a business.
“Once that real estate rollercoaster ride cooled, I decided to start looking around in my real area of expertise…the automotive industry. At first, I looked at some shops and then, by chance, I found Art Blumenthal’s website on-line one night doing a Google search. He had hundreds of listings in the northeast, so I contacted him.”
Joe continued, “When he told me about some of the locations he had listed and that one of them was owned by Jim Torres, I became more interested. I had known Jim’s sons since I was a kid, and when I worked at a gas station when I was a teenager, Jim and his wife would come in at least twice a week. To add even more to the ‘it’s a small world’ scenario, when I worked at the Volvo dealership his wife owned a Volvo and I worked on it.”
An Overview of the Business
As a prominent auto service center, the business is an established, profitable turnkey operation with equipment, inventory and experienced employees in place.
Located just north of Providence, the state capital of Rhode Island, this six-bay, fully equipped business offered a buyer a unique opportunity to live and work in a desirable New England community, with excellent demographics and minimal automotive service competition.
The business was consistently profitable for 30 years and is located on the 2nd most highly traveled local road in Rhode Island. It is an Official Rhode Island State Inspection Station, performing more than 1,000 state inspections per year.
It offers total car care including brakes, oil changes, exhaust, scheduled maintenance, tires, and steering and suspension services.
Seller Selects a Business Broker
Jim Torres said, “Art Blumenthal caught my attention when he sent out a marketing mailing that he was in the business of selling operating aftermarket businesses. As a District Manager for Midas, I knew Art Blumenthal back when he himself was quite successful as a Midas dealer. Eventually, he went into the auto service software business for many years, and although I had never met him personally, I did business with his company.
“I gave it some thought and knew that he had a reputation as being diligent and effective in whatever he does. So I contacted him and we talked a couple of different times to get to know each other and I felt comfortable with his approach. I thought it was important to get more of a national view for the business. I thought we could probably attract people from other than the immediate area.”
What’s the Business Worth?
Establishing a sales price with the guidance of Art Blumenthal included taking into consideration a variety of factors:
• Sales were trending upward;
• Strong cash flow that supported both the bank payments and significant owner compensation;
• Pre-approved for 85% Wells Fargo Bank financing, with a SBA guarantee; and
• Excellent demographics in the immediate area with homes, condos and apartments – professional, upscale income levels.
Scope and Timeline of Sales Process
Jim Torres said, “Art put together a very comprehensive presentation for potential buyers…I was very impressed with it. Over the next months, we had some interest from people in California, Florida and New England. But, like selling a used car, you get a lot of tire kickers sometimes and they don’t go any further.
“And then some months later…I would guess eight months into it…Art contacted me and said he had someone from Massachusetts who was interested. As it turned out, I knew who the young man was…Joe Cunha…because he grew up in our little town of 6,000 people. He played ball with my sons when they were kids. So it took Art, a man in Pennsylvania, to put me in touch with someone I already knew in Massachusetts. After thinking I should be doing a nationwide search to find the right buyer for my business, it took my broker Art Blumenthal to find the perfect candidate from my own hometown!”
Jim continued, “Plus, I knew the young man was very nice with a very good work ethic. So needless to say, I was very happy that Art had a potential buyer for me and that it was this young man, who I think a lot of and I think will do very, very well.
“So Art put us together and we went back and forth and it wasn’t all easy because there are many issues to discuss to come to an agreement on…the financing gets a bit difficult in today’s economy. But I’ve got to say that Art worked very hard on it and was very good in communicating with my attorney and the buyer’s attorney and the banks, and coordinating everything. I was very pleased with what he was able to do. It was handled in a very professional way.”
Scope and Timeline of Purchase Process
Joe observed, “My accountant looked over all the financials and we came up with a figure. Then of course, the bank also delves into the financials and bases their opinions and offers on cash flow, which needs to be healthy. Finally, we were able to agree on a purchase price.”
He continued, “For a first-time buyer, having a broker involved is definitely a plus. There’s an amazing amount of legwork involved to get the deal done and you need a guide as the months pass quickly. One of the biggest challenges is dealing with the banks, which are now really tough while protecting themselves.
“It was absolutely a learning process with a million details to take care of. Just one example was the last-minute requirement of the bank that I get flood insurance because there is a small river nearby. I would have never thought of that.”
Post-Sale Activities and Observations
A few months after the closing, Jim said, “I am quite pleased with what’s happened…the successful conclusion…and I believe Joe feels the same way.”
The sales contract provided that the Seller would provide a minimum of two weeks training after the closing.
Jim said, “For two weeks, I was there every day, and for two weeks after that, I was there for a day or two if he needed some assistance. It’s now been three months and I try to stop by once a week to see if there’s any mail, or I give him a call, or he calls me if there’s a question. I want him to be as successful as he can be and I’ll do anything I can to help him.”
Joe has welcomed the opportunity to “Be Your Own Boss” and has been able to take a look at the business from a fresh perspective. He has made positive changes, including some new equipment, software upgrades, procedural improvements and fresh paint.
Jim has been relieved of the stressful day-to-day responsibilities of the business and can now enjoy more time with his family, traveling and exploring other options and interests. He has converted his business equity into cash for his retirement and financial security, without the risks associated with seller financing.
Joe is controlling his own destiny. By securing long-term financing, he was able to leverage his investment and purchase a well-established business with exceptional sales and cash flow. His strong work ethic, automotive and business management skills will enable him to further grow the business and create substantial long-term equity.
Leveraging more than 30 years of experience as both an aftermarket business owner and aftermarket technology executive, Art Blumenthal LLC provides business intermediary and advisory services to both buyers and sellers of industry businesses of all sizes. Art is a member of IBBA (International Business Brokers Association, Inc.). For more information, or to initiate a no-obligation confidential consultation, visit www.art-blumenthal.com.