The Process of Evaluating Your Dealership

15.04.20 03:28 PM By Carrie Forbes

Introduction 

 

An Auto Dealership Evaluation prepared by Nancy Phillips Associates helps you define your personal needs and business options in terms of financial goals, the future direction of the business and your own exit plan. Knowing the value of your dealership is essential to making informed decisions about your personal and financial goals.  Your exit plan may be to transfer the business to heirs, sell outright, sell incrementally to a partner or separate the business from its real estate with a plan for each entity.  Understanding how to interpret the value of your dealership will help you to select the best option to maximize proceeds. 

 

 

The Evaluation Process 

 

The evaluation of your business involves extensive research and analysis of all of the elements which impact its value.  As a result of the high level of productivity our company has experienced in the sale of auto dealerships throughout the Northeast, Nancy Phillips Associates has acquired substantial knowledge and experience relative to market areas, demographics, franchise value, manufacturer's marketing plans and other elements affecting the value of your dealership. 

 

 

Recasting Financial Potential 

 

Since most automobile dealerships tend to keep reported profits as low as possible, financial recasting is a crucial element in assessing and understanding the actual earning history and the true profit of your business.  In assessing your company, Nancy Phillips Associates recasts the financial data for the preceding years.  For example, primary sales accounts and key expense accounts are re-allocated at market levels.  Sales opportunities are estimated at average industry levels while expenses which are too high or low are re-aligned.  Once recast, the financial history of your dealership translates the company's past into a tangible present value providing the data required to make an educated decision about the most suitable exit plan. 

 


Demographics and Market Area Analysis 

 

The analysis of important external factors ensures comprehensive assessment of the intangible value of your business. The position of your company in the local, regional and national industry is examined.  Industry trends, growth factors, competitors, market areas and geographic influences are analyzed.  

 

This section of the evaluation provides a foundation for projection of the future profit potential of your business.  Information resources include: 

 

  1. Current Demographic Data 

  1. Local Business Bureaus 

  1. Automotive Industry Statistics 

  1. Proprietary information documenting regional and local dealership performance 

  1. Comparable Dealership Sales  

  1. Manufacturer's Market Configuration Plans 

 

 

Business Assessment 

 

The completed Evaluation Report communicates the performance and potential of your dealership and makes educated recommendations as to its minimum and optimum value. The methodology employed in assessing your business is based on current dealership results, industry averages, profit potential and adjusted past and present cash flow projections. 

 

Confidentiality 

 

Nancy Phillips Associates, Inc. does not disclose any information regarding its clients’ identity, markets or financial history.