How do you value a vehicle leasing company?
When asking “How do you value a vehicle leasing broker”.. you will get a standard response, “Your vehicle leasing company is worth what someone is willing to pay for it.” Ok, now we have this comment out of the way which doesn’t really help your case, let’s start to build a valuation case.
Valuing a car leasing company – a quick guide
- How many customers do you have?
- What is the value of your lease portfolio. At WestWon, we use the P11d value as a KPI, as to the value of our lease portfolio. Think about how this sounds to a potential investor, “We have leased £25m of vehicles this year” is positioned better than “We have leased 500 £50,000 cars”.
- How many repeat clients do you have?
- What is the split between consumer and corporate business. WestWon look at the “lifetime value of a client.” The lifetime value of a consumer (a person who is looking to buy for their personal use) is about 10% the value of a business user with a fleet.”
- Is there a market focus? Type of vehicle, type of customer, location of customer for example.
- Your positioning statement. WestWon focus on the business user with fleets between 5 and 50 vehicles. We aim for an 80% corporate to 20% consumer split. It is much easier to value a company when you have a clear idea of what you are selling.
- How do you win new business? Do you have a great website, are sales down to mailing or existing contacts? Are you well known in the local area, do you get business from car dealerships?
- What are the financials? What is your gross profit, what is the average profit per vehicle, what is the lifetime value of a client?
- Do you have any long term talented employees?
- Value in the company? Are there assets in the company, are there any tax losses etc
- What integration savings can be made? WestWon have a number of offices, we have a Finance Director and finance team, a software developer, six people in customer services, a full-time marketing coordinator, accounting software, telephone systems, lease lines…the list can go on. If we can take out some of these costs from your business – or ours – then the value goes up.
You need to value your vehicle leasing business
Before you have any meetings about selling your car leasing company, answer the questions above and document the answers in a simple Information Memorandum. Make the buyers job easier. Work out what you want to get paid for your business and sell yourself the valuation. If it does not sound right or the valuation appears over the top to yourself, it will not sound correct to a buyer.
Advice on valuing your car leasing company
We might not be the buyer, but at the very least I can offer some free advice on helping you value your vehicle leasing company. Please call me for a confidential conversation. Jeremy Hall, Chief Executive Officer, WestWon Fleet.