This is an acquisition-underwriting model for buying a single-site gas station and convenience store with an SBA 7(a) loan. It is written for the buyer who has to defend the numbers to a lender, a searcher, an ETA operator or an owner-operator, rather than for someone opening a store from scratch.
The engine is a fuel-margin model in cents per gallon combined with an inside-merchandise gross-profit model, and it puts back three things a broker's sheet leaves out. First, credit-card swipe fees. The pump margin looks like 35 cents a gallon until roughly 6 to 9 cents of card fees come off it, about 19% of the fuel gross and the industry's second expense after labour, so the model separates them and your fuel line becomes the net you keep. Second, the owner working sixty to seventy hours behind the counter, replaced by a market manager at a real salary. Third, the underground storage tanks: a UST and environmental reserve plus the Phase I ESA are on the page, because strict liability follows the title whether or not you caused the contamination.
Put those three back and the true DSCR is 1.69x while the broker's naive DSCR reads 2.60x. The gap is the swipe fees, the manager and the tank reserve. Because fuel margin is the most volatile line in the business, a normal down-year of minus 30% on fuel margin drops coverage to 1.08x, under the 1.25x lender floor. The risk here is the margin, not the volume.
The model also insists you read the business on gross profit rather than revenue. Revenue looks large, about $5.1M, because fuel is a low-margin pass-through, and the SDE margin is a structurally low 7.3%, which is normal. Of $716,671 of gross profit the inside store contributes 46% and net fuel 48% on a fraction of fuel's revenue, and the inside book covers debt service 1.98x on its own.
Base case, balanced c-store on a leasehold: 1.2M gallons a year at a net margin of 28.5 cents, net fuel profit of $341,671 after $78,329 of swipe fees; inside sales of $1.1M at a 30% margin for $330,000 of gross; SDE of $374,671; Adjusted EBITDA of $314,671 after a $60k manager and a $12k UST reserve; a purchase price of $1,124,014 at 3.0x SDE; an SBA loan of $1,008,411 at 78.7% leverage; debt yield of 28%; cash-on-cash of 43% in year one and a five-year equity multiple of 4.97x, flagged as leverage-amplified.
Ten machine-verified tabs cover START HERE, Setup with three profiles, the Fuel and Merchandise Revenue Engine, SDE and Valuation, Sources and Uses with a fee-simple real-estate option on a twenty-five-year note, a five-year P&L, DSCR and Debt with a real amortization schedule, Returns and Exit, a Dashboard and a Benchmarks and Sources tab. No IRR is printed, deliberately. Educational planning tool, not financial, legal or investment advice: confirm your fuel-supply agreement, environmental due diligence and SBA term sheet.
Got a question about the product? Email us at support@flevy.com or ask the author directly by using the "Ask the Author a Question" form. If you cannot view the preview above this document description, go here to view the large preview instead.
Source: Best Practices in Integrated Financial Model Excel: Gas Station & C-Store Acquisition Underwriting Model Excel (XLSX) Spreadsheet, ProformaWorks
|
Download our FREE Strategy & Transformation Framework Templates
Download our free compilation of 50+ Strategy & Transformation slides and templates. Frameworks include McKinsey 7-S Strategy Model, Balanced Scorecard, Disruptive Innovation, BCG Experience Curve, and many more. |