Valuing Companies with Real Estate: Appraisal Experts Untangle the Issues: A BVR Special Report by Unknown

Author:Unknown
Language: eng
Format: azw3
Publisher: Business Valuation Resources, LLC
Published: 2014-09-12T04:00:00+00:00

11. Special Issues to Consider When Valuing a Gas Station/Convenience Store1

The valuation of a gas station/convenience store presents a number of special considerations—unique issues that ultimately affect the value or risk rate. Looking for insight into this type of valuation, BVR interviewed Lynton Kotzin, CPA/ABV, CBA, ASA, CFA, and managing partner of Kotzin Valuation Partners LLC. Kotzin has significant expertise in the valuation of these types of entities.

BVR: What changes have you seen in the gas station/convenience industry over the years? Lynton Kotzin: No business can be valued in a vacuum, as the performance of a business and thus its value are affected by economic conditions, industry trends and characteristics, and other external factors. To properly value a gas station/convenience store, it is important to understand the significant changes in the industry over the past decade. The retail gas station industry began with a service orientation, providing routine and preventative maintenance. Convenience stores emerged as an outgrowth of the grocery store industry. These two types of retailers merged to create the gas stations with convenience stores industry.

The number of retail gas station-only sites declined as both consumers and the major oil companies developed a preference for larger, more modern sites that had a convenience store attached. Over the period 1997 to 2002, the number of gas stations with convenience stores rose by approximately 14% compared with a 38% reduction in gas-only sites. The industry became more consumer-driven as a way to attract a wider demographic that included women and upscale customers. Technological improvements and innovations, such as pay-at-pump technology, credit and debit card payment options, touch-screen monitors, remote payment systems, and automated fueling dispensers, also helped to increase efficiency and entice customers. Many locations also began offering prepared food and branded fast-food options, expanded grocery selections, banking, money orders, selfservice car washes, and other ancillary services.

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