How to Purchase an Auto Dealership

Posted on Jul 29 2014 - 3:43am by Editor

All auto dealerships are not the same. Auto dealerships have numerous corporate structures. Additionally, some of these businesses have not identified their value beyond their inventories and annual sales numbers. The best way to understand auto dealerships, their structure and valuations, and how to purchase an existing dealership is to work with a brokerage service that specializes in auto dealerships and similar businesses.

Auto DealershipLooking at Business Structure in Auto Dealerships

Although many of these auto dealerships got started out as small family-owned businesses, some auto dealerships have evolved into multiple auto maker dealership networks, selling and leasing different makes and models of cars. Structurally, the average auto dealership has evolved into the form of a Limited Liability Corporation (LLC).

For the auto dealership founders and CEOs who own and run dealerships that have changed structure over the years, executing an exit strategy can prove complicated due to the structure. They simply cannot post a classified ad with the local business weekly advertising the sale of the business. The same can be said for the dealership looking to acquire smaller dealerships in their territory. They may not be in a position to research and identify leads on auto dealerships looking to sale or those in position in need of a bail out like a bankruptcy or dissolution. Such complex transactions require the expertise and experience of a brokerage that can assist in the research, negotiations and sale, especially in identifying quality candidates.

Valuations Eliminate Speculation and Estimation

As far as business transactions go, a brokerage service can conduct a thorough valuation of a prospective business for purchase through research and data collection. For those seeking to purchase an auto dealership, there are various factors to go into an auto dealership transaction, but identifying the real value of another business should be left to experts like brokers. Auto dealerships may utilize estimations on projected sales numbers based upon their own market assumptions and speculative notions regarding consumers, but a brokerage service can provide an objective opinion with market research and analysis to arrive a concrete figure for a valuation.

Purchasing an Auto Dealership through a Brokerage

The best way to complete an auto dealership transaction, sale or acquisition, is to work with a brokerage service that specializes in such deals. Companies like Performance Brokerage Services specialize in making these types of deals happen. Their experience and expertise are prime assets to clients.