Auto Salvage Industry Business Broker Part 2

There are 11,000 full-service yards out there. They range from very profitable 30-acre operations near a major population, to tiny yards in the middle of nowhere.

4,500 of these yards have modern inventory software & systems, whether made by Hollander, Pinnacle, Car-Part, or Buddy. There are 900 self-service yards (U Pull It). 200 of them are owned by the chains, and another 125 are using the CRUSH system to manage the yard. The full-service yards are consolidating into fewer, but bigger yards, while it is becoming very hard to find a great location for a new self-service yard.

These 4,500 modern yards are acquisition targets for the chains as well as individuals. Many of them are owned by operators who are happy to keep earning money for years to come. If they’re smart, they’ll be able to anticipate the changes that are necessary to stay profitable. That might mean talking with other operators about trends, going to the trade shows, hiring consultants for review of the operations, joining peer groups, brokering more, selling online, being diligent in their work, etc.

There are a few hundred A-grade full-service and self-service yards out there in the hands of private owners (not chains). They are the prime targets for acquisition by the chains, yet for some reason they’ve resisted. Many owners feel their operation is the best use of their time and capital, and have motivation to continue earning money, or passing it down through the family.

But do those opportunities exist today? With 900 U-Pull-It yards, and 11,000 full-service yards, you can bet that the A-class properties were taken long ago. Finding the B-class properties is the name of the game today.

The up and coming yards are doing many things right. Profit is just one measure. It might also be the location, facility features, the team, relatively low competition, etc. They are doing what they can to make improvements, and they know that the better the condition of their company, the more likely they are able to sell the business when ready.

Some of these operators have value in mind when they build their business. They are smart about the location, layout, warehouse capacity, inventory systems, etc. Many of them study several yards before building. The design is key to eventually extracting maximum value.

Now if you have an average yard, why would a buyer want to buy all of your assets if you’re not making money with those assets? Possibly because they believe they have this business figured out and can make it work better than you can. Or maybe they have a network and need your location to fill some gaps. But if there is no good reason, the yard may be difficult to sell.

Sometimes I will be approached by buyers looking in a certain part of the country, and they don’t want to spend a lot of money. I might remember that a yard owner spoke with me over the phone or at a trade show about the possibility of selling, and make a deal happen even with an average yard whose best years are in the rear-view mirror. The buyer just needs a certain size yard that can be permitted. But the stars need to align. I wish it were as simple as putting a yard on a multiple listing service, but this industry just doesn’t work that way.

There are some unlucky yards out there that are just too remote, small, environmentally challenged, or run by a group that just doesn’t have the enthusiasm they once had.

However, if they’re lucky enough to be in a valuable area of town, they may be able to attract a buyer needing their industrial or commercial zoning for another use. Otherwise, the owners may have a financial burden on their hands. I have sold several yards that were not able to attract other yard owners as buyer, but we were able to position it properly for sale to a buyer in another industry.

This industry does not have enough buyers. How many other industries have 12,000 companies and so few national chains? There are regional players in several states, although their holdings are restricted to a certain geographical area.

This makes selling an auto salvage yard challenging, to say the least. To be continued…

George Metos runs GM Consultants, a business brokering agency specializing in representing owners of full-service & self-service auto recyclers, and towing companies. He represents yard owners to dozens of national and regional recycling companies. For several years, he consulted with CRUSH Software, to help them become the standard yard management system for U-Pull-It auto recyclers. He can be reached in Salt Lake City, Utah at 801-953-1003 or,