When a car dealership owner decides to sell a store, it is a big — even life changing — decision. The dealership is more than a business. It's an identity. It's a legacy. And there is a lot more at stake than dollars.
- "My employees are like family— will they be taken care of under a new owner?"
- "My whole family has gotten used all the benefits of owning a car dealership… can I give up the perks of being a dealer?”
- "I've been ‘the dealer’ around here as long as I can remember. What's next?"
- "What if I don't like retirement?"
The truth is, most dealership owners are experts at building a business, but they aren't experts at selling a business. It's a totally different equation. I hate to see owners who have built fantastic legacies lose dealership value in the final stretch of their career because of common, avoidable mistakes.
As the owner of National Business Brokers, I've been helping dealership owners buy and sell their stores for almost 30 years, and we've sold more than 750 dealerships in that time. Here are a few truths I've learned along the way. Owners, if you'll follow these three simple rules, you'll be well on your way to a successful sale of the dealership you built.
1. Don’t Talk
I get it. Selling your dealership is a big deal and it’s hard to keep that a secret. But before you tell your friends – or other dealership owners – think about what you could be risking.
Talking could create an employee exodus.
If your employees find out you are selling, they might get scared and start looking for other places to work. It’s hard to keep a dealership in sale-ready shape if you start losing employees left and right. Losing employees can drive the value of your dealership down as prospective buyers see a store in disarray.
Instead, focus on finding the right buyer for your dealership so your employees will continue to have a great place to work.
Handshake deals are rarely good deals.
It can be tempting to put feelers out to other dealership owners, to see if anyone might want to buy your store with a handshake. But “handshake deals” are rarely as simple as a handshake. (And sometimes they are an absolute train wreck of attorneys, accountants, factories and families.)
Your friend may well be the best person to buy your dealership – work with an expert to make sure the deal goes through successfully.
Beware of bad advice.
There is something about announcing your intent to sell that brings out all the “experts” around you. Keep in mind, just because someone is an expert in one area doesn’t mean they are an expert in another.
Attorneys know how to keep a deal legal and close all the loopholes. Accountants know how to capture all the numbers and protect you from financial surprises. Those other dealership owners you know probably know as much as you do about selling a dealership. And regardless of what mean dealers think, the factories are not necessarily your friend in this moment.
What you need is a specialist who has successfully closed hundreds of deals in the automobile dealership industry. You need an expert to handle the marketing of your dealership, and the negotiation of the deal. You shouldn’t trust your legacy to anything less.
2. Don’t Wait
Everyone’s nightmare: recession
This is everyone’s fear, isn’t it? That a recession will hit and wipe out the value you’ve built into your dealership over decades? It can happen. Many of us remember it happening. It is tragic, and entirely possible.
Years from now you want to be the person who is telling the story of how you sold your dealership right before the bottom dropped out, not right after. Your successful sale can come down to timing. Don’t wait too long.
The burden of factory requirements
There are a couple of ways to think about this one: On the one hand, the factory might be requiring imaging for your dealership and you want to sell to avoid having to go through that yourself. On the other hand, maybe the factory has not issued imaging requirements for your dealership yet and you want to negotiate a full-value deal while you are up to date.
In either scenario, waiting can cost you money.
Health issues have their own clock
We all know friends who have been sidelined (or worse) by an unexpected health crisis. We’ve all felt the sting as we heard about the chaos it caused their families who had to sell the dealership under emergency circumstances.
Nobody wants to be the subject of that story. If “enjoying retirement” is part of your plan, don’t put it off too long.
3. Don’t Quit
It’s important to stay focused and keep building your business all the way to the finish line. Otherwise you could stumble and lose value, right when it matters most.
Sell all the way to the close
Buying a dealership is a multi-stage process. Stick with it. Owners who stay engaged in the process – providing details and answering buyers’ questions as necessary – get the best-value deals with the lowest amount of stress.
Keep in mind that buyers can lose focus, too. Yours is not the only dealership for sale and an “easier” deal can be attractive. By staying engaged in the deal, you keep the buyer engaged as well.
Keep your foot on the gas
Short-Timer’s Syndrome is a real issue. It’s tempting to start relaxing the reins once you decide to sell. Why work to grow your business if you aren’t going to be around to see the results? That kind of thinking can cost you a lot of money.
Staying on top of maintenance, quality control, customer service and employee management – just like you’ve always done – will mean your potential buyers see your dealership at its best. That will help you get the best price possible for the dealership you worked so hard to build.
You haven’t run your business in a shabby manner all these years, so don’t let it look that way now. Keep your eye on the finish line and drive hard across it.
Then you can pop the champagne and celebrate!
