A couple at a car dealership sitting in front of a car, speaking to a car dealer.

A guide to selling your dealership

A guide to selling your dealership

Synopsis
3 Minute Read

If you’re thinking of selling your dealership, you want to ensure you’ve taken the steps to help the process go as smoothly as possible, both for you and the buyer. Aside from the formalities of the transaction, there are some considerations to help you have the peace of mind you’ve done your due diligence and accomplish your goals.

National Leader, Dealerships
National Leader, Succession Services

How to make the process and transition as smooth as possible

Selling your business is a decision and process fraught with financial implications and emotional impact.

Whether you’ve decided to sell to an employee, a third-party, or a member of your family, taking a thoughtful approach will ensure you have control over the issues that matter to you, and give you peace of mind knowing you’ve worked hard to reach your goals.

Between the planning, gathering legal documentation, and understanding the tax implications, there is a lot that goes into selling a dealership.

Though it may be a complicated and lengthy process, it doesn’t have to be overwhelming.

By knowing your goals, managing your expectations, and having the right team by your side, selling your dealership can go much smoother than you’d think.

Getting ready to sell

Before you begin any formal proceedings, such as marketing the business or speaking with the person or people you intend to sell to, there are a few things you must do to get the process off on the right track.

  1. Get your house in order
    • Regardless of who you sell to, they are all going to be looking for the same information: financial statements, lease agreements, franchise agreement, employment agreements, accounts payable reports, insurance information, and tax returns, to name a few. By having your financial documentation up to date and ready to go, the sale will go faster, and the buyer will appreciate your due diligence. It’s also important to separate any passive assets from the business; be that a personal car collection or a stock portfolio. It will help to speak with a trusted business advisor in these early stages to know what information a seller will need and want to see before moving forward.
  2. Determine your path
    • If your only goal right now is to sell but you don’t know who you want to sell to, now is the time to start thinking about that choice. Depending on whether that’s a third-party, family member, or employee, the next steps in the process will vary. Mapping out what you want to achieve from a sale may help you decide which is the right option for you. If you’re hoping to support your family on a longer-term basis and don’t mind getting a bit less from the sale, a family member might be the right call. If you’re looking to maximize profit and walk away from the business altogether, a third-party could be your best bet. If you have an employee who has expressed interest and you’re willing to advise and train them for the owner’s role, then this could be a viable option. Ultimately, what you want to do after your business is sold will help shape your path forward.

MNP knows dealerships and we know the hard work that goes into running a successful operation. Visit our page to learn more about the support we can offer dealership clients, such as succession planning and our personalized tax and accounting services.

On the path to implementation

Once you’re confident with the path you’ve chosen and your house is in order, you’ll be ready to get to work on the actual sale of the business. This might be a years-long, ongoing process or a simple hand the keys over and walk away situation, either way, you’ll want to ensure it runs smoothly.

While your choices are vital to the process, it’s important to note that the Original Equipment Manufacturer (OEM) has a lot of control over the sale. They will have final say on whoever you’ve lined up and are well within their rights to veto your choice.

Given the complexity of an undertaking like this, there are a few things to keep in mind to help you maintain control where you can and stay focussed on the desired outcome.

  • Prepare for the unexpected: A lot can change in a short period of time. You may have the best intentions to follow through with one plan but if another opportunity comes up, give yourself the flexibility to learn more about what that would look like. Emergencies and unexpected medical situations may also arise, making having your house in order at the earliest possible time a very important step. Planning for succession early can be helpful in having a say over your future and that of your business. Working closely with a your trusted advisor, you’ll be able to understand the possibilities, risks, and opportunities to help paint a clearer picture.
  • Build your team: Coming into the sale process with a strong team of advisors is essential. This includes your accountant, lawyer, succession planner, financial advisor, and possibly others, who are there for you to help guide you through the process and answer any questions you have along the way. This also applies to the team of people who work for you. If you have solid employees who wish to remain on after the sale, make sure you take the time to review or renew their contracts so they don’t get forgotten.

Other considerations

There are a lot of things to consider when selling the business you’ve worked years, or decades to make the successful operation it is today.

Aside from the formalities of the process, you may need to be frequently assessing your priorities. As opportunities present themselves, such as multiple buyers expressing interest, be flexible to changing, or at least adjusting, your goals.

Have you considered how involved you want to be in the operations after you’ve sold? Depending on which route you choose, you’ll have more freedom to act as a consultant or mentor with some than with others. If this is something you want, make sure to weigh that against the choices available to you.  

When it comes to implementation, knowing your role will be key to keeping the process smooth. If you’ve done your due diligence and settled on the right buyer, have faith that you’ve made the right choice that you’ve done what’s right for you.

Throughout it all, having a financial advisor at your side will relieve you of the burden of having to do everything on your own.

Contact us

If you’re thinking about selling your dealership, it’s best to get started sooner rather than later. For more information and to begin building your team of experts, contact Chris Schaufele, National Leader, Dealerships, at [email protected] or Shane King, National Leader, Succession Services, at [email protected]   

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