Determining the value of your dealership is the first step. Remember that the value of your business in the open market may be quite different from your own assessment of your dealership's value.
Overpricing or underpricing your dealership is a common mistake. Don't rely on your own assessment, or guess at your dealership's value. Know exactly what the sale of your dealership will mean to you.
Knowing what your dealership is worth is essential for determining whether to sell as well as developing a well-planned exit strategy that supports your future financial goals.
Many owners believe they will save money by selling their dealership themselves. But dealership owners who attempt to handle their own sale often have an unrealistic price in mind. Or they attempt to sell their dealership to the wrong buyer - and end up not closing the deal.
A diligent and trustworthy automotive specialist will provide an accurate assessment of the value of your business based on the most current market conditions. This ensures that your dealership is priced appropriately - and therefore sells expediently.
A qualified specialist will be unrelenting in his or her efforts to properly protect your interests, work to negotiate a favorable deal structure, and successfully navigate the factory approval process. This intricate, highly-integrated level of service will add value to your dealership sale that is worth many times your specialist's fee.
Before you enter into any agreement to sell your dealership, ask yourself these questions:
- Does this person understand my business?
- What is their reputation?
- Do I feel comfortable having them represent me?
- Do we communicate well?
- Will this person be uncompromising when it comes to protecting my interests?
- Make sure that your financial statements and balance sheets accurately represent business operations.
- Consider tax and estate planning in order to avoid unnecessary reduction of the proceeds of your dealership sale.
- Minimize the difference between the stated book value of your inventory and its real market value.
- Maintain the business operation by viewing your company as a buyer would.
Sellers often make the mistake of not preparing their business for eventual sale. This lack of planning costs owners both time and money and often results in delayed closings, selling for less than they could have or entering into a contract that falls apart before completion.
You owe it to yourself to maximize the sale of your dealership. By engaging a trusted and experienced representative to assist you, you will discover the true value of your business and understand the sale process. This foundation will enable you to continue operating your dealership as you always have until you come to the closing table.
1. Having an unrealistic price in mind.
Owners are often unrealistically high or low in pricing their own dealership, resulting in money left behind - or no deal at all.
2. Not seeing your business through the eyes of a prospective purchaser.
Whether you've invested five years or a lifetime in your dealership, an investor assesses the potential for future return, not the value of your sweat equity.
3. Thinking you can best negotiate your own sale.
In the automotive industry, representing your own best interests is extraordinarily difficult. Once an owner's initial price is rejected there is nowhere to go but down. Skilled negotiation by an accomplished intermediary builds value far beyond the fee arrangement.
4. Attempting to sell to the wrong buyer - and not making the deal.
Many owners believe the best buyer is an employee or a local competitor. In fact, the best buyer is the one who will pay the most, close fast and maintain confidentiality. These are rare. There is no substitute for a thorough and knowledgeable market search for the most appropriate buyer - the one who will meet your own specific needs.
5. Impatience.
The commitment required to orchestrate a sale, facilitate legal documentation and negotiate complex factory approvals is time consuming and difficult. This process requires expertise, experience and finesse. An owner's time is better spent running the dealership while entrusting a professional with management of the transaction.
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