71-Year Auto Salvage Yard Near NYC

$4.4M

Revenue

$2.3M

SDE

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Full Editorial Writeup

This is a 71-year-old automotive salvage and recycling operation located in New Jersey, roughly 10 miles from New York City. The business buys end-of-life vehicles including cars and commercial trucks, then systematically processes them: weighing, draining fluids, pulling batteries, seats, steering, wheels, tires, engine parts, and glass, then routing each component to either parts resale or scrap metal recycling. That dual-revenue model is the whole game here, and it is a smart one. Parts sales carry fat margins and the scrap floor catches whatever does not sell, so you are diversified across a retail channel and a commodity channel inside the same yard.

The numbers are the headline. On $4.36M of revenue the business throws off $2.27M of SDE and $2.25M of EBITDA, which is a 52 percent owner-earnings margin. That is extraordinary for a yard, and it tells you this is a mature, paid-off operation with cheap inventory acquisition and a long-tenured customer base of repair shops and DIY 'car guys.' Three full-time staff work the phones filling orders daily, and there are 35 total employees with a GM in place.

The sale includes a massive parts inventory listed separately ($2M not included in asking) and a $5.06M FF&E package that IS included: scale, testing equipment, backhoes, welders, cutting equipment, trailers, racks, and computer systems. The real estate is owned and valued at $4M but is NOT included in the asking price, available via long-term lease or separate acquisition. The owner is retiring, which is the classic reason a high-cash-flow boring business hits the market underpriced.

Why we like it

Earnings quality is exceptional for the category, with $2.27M SDE on $4.36M revenue, a 52 percent margin that signals paid-off assets, cheap inventory inputs, and pricing power on parts. EBITDA and SDE are nearly identical at $2.25M and $2.27M, which suggests modest owner add-backs and clean, real cash flow rather than aggressive seller adjustments.
The moat is location plus time. Seventy-one years in business 10 miles from NYC means entrenched relationships with repair shops and decades of accumulated inventory and processing know-how that a new entrant cannot replicate. Salvage yards also face heavy permitting and environmental zoning barriers, so the AAA location is effectively un-cloneable.
Demand is genuinely recession resistant. When money is tight, drivers and shops repair rather than replace, and used and salvaged parts win directly at the expense of new OEM parts. The scrap metal side adds a commodity hedge, so you make money whether the value is in the part or the steel.
Operator leverage is real because a GM is already running the floor and three dedicated phone staff handle order flow. The stated growth path into international sales is plausible given the parts inventory, and the business is structured to run without the founder living in it day to day.

How to improve it

Stand up a proper online parts catalog and integrate with marketplaces like eBay Motors, Car-Part.com, and Hollander interchange systems. Three people on the phones is a 1990s sales motion, and digitizing the inventory unlocks national and the proposed international demand without adding floor labor.
Negotiate the real estate purchase as part of the deal rather than carrying a long-term lease. At $4M the owned property generates a controllable cost line, and owning the dirt protects you from lease renewal risk on an irreplaceable, permitted salvage site near NYC.
Implement dynamic scrap hedging and contract pricing on commodity metals. With steel and aluminum prices swinging, locking forward sales or setting price floors with scrap buyers smooths the most volatile revenue line and protects the EBITDA margin in down cycles.
Audit and accelerate inventory turns on the $2M parts stock. Salvage yards bleed cash when slow-moving SKUs occupy prime racking, so a 90-day aging report tied to automated markdowns frees capital and space while keeping fast movers in stock.
Build a fleet and commercial truck acquisition pipeline. The listing already processes commercial trucks, and heavy and medium duty salvage parts carry higher per-unit margins than passenger cars, so dedicated buyer relationships with fleets and insurers can lift average vehicle yield.
Formalize the GM role with documented SOPs and an incentive comp plan tied to gross margin. A retiring owner means tribal knowledge is walking out the door, so capturing processing protocols and locking in the GM economically de-risks the transition and supports an eventual second sale.

Diligence notes

Verify the $2.27M cash flow with three years of tax returns and bank statements, and scrutinize whether scrap commodity pricing in recent years inflated the trailing numbers. A spike in steel prices can temporarily flatter a salvage yard's earnings, so normalize against a multi-year scrap price average.
Pin down the real estate and lease structure precisely. The property is owned and valued at $4M but excluded from asking, offered via long-term lease with optional purchase, so confirm lease term, rent, renewal rights, and whether the seller will commit to a sale price before you build a model.
Confirm environmental and regulatory standing in full. Salvage yards carry contamination, fluid disposal, and stormwater liability, so commission a Phase I and likely Phase II environmental assessment plus a review of all DEP permits before any close, since legacy soil issues can dwarf the purchase price.
Reconcile the inventory and FF&E valuations. The $2M parts inventory is excluded and the $5.06M FF&E is included, so validate the FF&E with an independent equipment appraisal and confirm the parts inventory is realistically saleable rather than aged dead stock you'd be buying separately.
Assess customer and channel concentration. Three phone reps fill orders to repair shops and individual buyers, so request a revenue breakdown by channel and top customers to gauge whether earnings depend on a handful of accounts or a broad, sticky base.
Clarify the asking price and deal terms, which are entirely undisclosed. With financing 'open to negotiation' and real estate and inventory carved out, build a full sources-and-uses before engaging so you can frame an offer on operations alone versus the full asset package.

Source

Originally listed on BizBuySell. View original listing →