Business valuation mandate in the context of the sale of a car garage

Mandate Description

The objective of the mandate was to determine the fair economic value of the company prior to the transaction, based on an in-depth analysis of its operational performance, market outlook, and the specific characteristics of the automotive dealership business model.

The valuation was conducted in the context of the transfer of an independent business, involving combined wealth, financial, and commercial considerations.

The analysis covered vehicle sales and after-sales activities, the contractual relationship with the manufacturer, the cost structure, and the company’s sustainable earnings capacity. Particular attention was given to the value of the recurring customer base and the profitability of the workshop, both of which are key drivers of margins and long-term value in this sector.

Key Issues

The main challenges of the assignment were to:

• Establish an objective and defensible value, reconciling the seller’s expectations with prevailing market conditions;
• Identify the value drivers specific to the dealership model, including customer loyalty, the balance between workshop and vehicle sales, and resale potential;
• Incorporate sector trends related to the energy transition and the digitalisation of the customer journey;
• Ensure methodological neutrality within a confidential negotiation framework.

Approach and Results

The valuation relied on several complementary approaches, in line with Swiss and international professional valuation standards:

• Discounted Cash Flow (DCF) method, based on the projection of future operating cash flows;
• Market multiples method, using a panel of comparable transactions in the automotive sector, with observed EBITDA multiples ranging from 5.0× to 7.0×;
• Yield method, based on the capitalisation of a normalised and sustainable earnings capacity;
• Practitioners’ method, combining the income-based value and the adjusted net asset value derived from restated financial statements.

The analysis resulted in a robust and defensible valuation range, which served as a reference framework for discussions during the transfer negotiations.

The mandate also highlighted the intangible value associated with the company’s commercial reputation and customer loyalty, both of which played a decisive role in the determination of the final transaction price.