Diesel Engine Repair Shop, 25-Year Johnson County KS Service Business

$2.0M

Revenue

$773K

SDE

2.2x

Multiple

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Full Editorial Writeup

This is a 25-year-old diesel engine repair and service shop based in Johnson County, Kansas, serving a high-demand specialty market. The business handles comprehensive repairs and maintenance including diagnostics, engine rebuilds, transmissions, fuel systems, clutches, and driveline work. With a loyal, repeat-and-referral customer base and six employees (four full-time, two part-time), it operates as a genuine operator-run trade business rather than a flip.

The numbers are the headline here. On $2.04m of revenue the shop throws off $772,926 of seller cash flow, a 38 percent owner-earnings margin that is exceptional for a repair shop and signals real pricing power, a sticky customer base, and disciplined overhead. At a $1.675m asking price that is a 2.17x multiple on cash flow, which is cheap for a business with this margin profile and tenure.

Diesel repair is about as recession-durable as trade services get. Fleets, farms, contractors, and owner-operators cannot defer engine and fuel-system work when their equipment is how they earn a living, and in a downturn the fix-it-rather-than-replace behavior often helps shops like this. The real estate is owned by the seller and offered separately for $875,000, so a buyer can either layer in an SBA real estate loan for instant equity or negotiate a lease.

Why we like it

Earnings quality is the standout: $772,926 of cash flow on $2.04m of revenue is a 38 percent margin, which is elite for an auto or diesel repair shop and implies real pricing power and tight cost control. At 2.17x that cash flow, the entry price is well below typical repair-shop comps, giving you downside cushion if margins normalize lower under new ownership.
Durability and moat come from 25 years of reputation, a loyal repeat-and-referral customer base, and specialization in diesel. Diesel work is technical, trust-driven, and not easily commoditized, so customers who have relied on this shop for a quarter century do not switch over price. That stickiness is worth real money in diligence.
Market tailwinds favor diesel repair because the installed base of trucks, fleets, farm equipment, and heavy vehicles keeps running regardless of the economy, and owners repair rather than replace when capital is tight. This is essential maintenance for people whose livelihood depends on the equipment, not a discretionary purchase.
Operator advantage is clear: six trained employees, an established brand, and a seller willing to structure training give a mechanically literate buyer a running start. The seller also hints at growth opportunities reserved for qualified buyers, suggesting there is upside the current owner never chased.

How to improve it

Build a recurring maintenance program. The business today is largely transactional repair work, so launching scheduled preventive-maintenance contracts for local fleets, municipalities, and farm operations would convert one-off jobs into predictable monthly revenue and smooth out cash flow.
Pursue fleet and commercial accounts directly. With diesel demand concentrated in trucking, agriculture, and construction, a dedicated outreach effort to sign multi-vehicle fleet accounts could meaningfully grow top line without adding marketing spend, since referrals already drive the business.
Install shop-management software and basic KPIs. Track technician efficiency, bay utilization, average ticket, and parts margin. A 38 percent margin is strong, but formal metrics let a new owner protect it and spot where labor hours or parts markup are leaking value.
Add capacity by hiring and training apprentice techs. The constraint on a shop like this is skilled labor, so a structured apprenticeship pipeline reduces key-person risk on the existing crew and unlocks revenue currently capped by the number of qualified wrenches.
Capture the real estate in the deal. Negotiate the $875,000 property into an SBA 7(a) or 504 package so you own the facility and build equity instead of paying rent, which the seller explicitly flagged as an option and which protects against future lease or relocation risk.
Extend service hours and add mobile diesel repair. Offering on-site field service for stranded fleet trucks or after-hours emergency work commands premium pricing and deepens relationships with the commercial accounts that drive the highest-value tickets.

Diligence notes

Verify the $772,926 cash flow with three years of tax returns and an add-back schedule. A 38 percent margin is unusually high for a repair shop, so confirm it is sustainable and not inflated by one-time items, underpaid family labor, or owner work that a replacement manager would need to be paid to do.
Quantify owner dependence. The seller is retiring after 25 years and relationships may run through him personally, especially with key fleet or referral customers. Understand how much revenue is tied to the owner's reputation and whether it transfers, and structure an earnout or extended transition to de-risk it.
Assess the six-person team's tenure, pay, and retention. The business lives and dies on skilled diesel technicians, so document who the lead techs are, whether any are at retirement age, and whether they will stay post-close. Technician flight is the single biggest threat to this cash flow.
Clarify customer concentration and revenue mix. Determine what share of revenue comes from the top handful of fleet or commercial accounts versus walk-in retail work. Heavy concentration in one or two fleets would materially change the risk profile and the price you should pay.
Separately underwrite the $875,000 real estate. Get an independent appraisal and environmental Phase I, since engine and fuel-system shops carry contamination risk from oils, solvents, and fuel. Confirm the price is fair and the site is clean before rolling it into an SBA facility loan.

Source

Originally listed on BizBuySell. View original listing →