News & Insight

Article originally published by Automotive News on September 29th, 2020.

Toronto-area based Dealer Solutions Mergers and Acquisitions (DSMA) has made The Globe and Mail’s list as one of Canada’s Top Growing Companies for 2020.

Founded in 2012 by Farid Ahmad, DSMA facilitates buying and selling dealerships in North America. It ranked in at 116.

The list highlights the achievements of 400 businesses, based on a three-year revenue growth. To be eligible, companies must be headquartered in Canada, and must have generated revenue of at least $2 million in its most recent fiscal year and $200,000 in the same period three years prior.

DSMA reported revenue between $5 million and $10 million last year. It has 36 employees and operates a satellite office in Florida as well as a regional location in Michigan.

DSMA was the only automotive-related business to make the Globe and Mail and it was also the company’s first time.

“It was a real feeling of accomplishment and humbling to feel we could even be considered as an automotive aftermarketing company, if you want to call it as such, to be considered one of the fastest growing companies in Canada,” Ahmad told Automotive News Canada. “It wasn’t like we were 399th and just scraped in. To be ranked 116th, we were virtually in the top 25 percentile. It’s very exciting and I’m really pleased with my people.”

He said the company facilitates about 50 deals a year, but expects it could rise to 65 by the end of 2020, including the U.S. transactions. Overall, he said the company could reach the 260 mark.

“I thought if we did three deals a year, I’d be laughing all the way to the bank,” Ahmad said. “I never thought we’d do 260 in eight years – no, not in a million years. Our timing was impeccable because our growth spurt has correlated directly to the age curve of car dealers looking to exit.

Dealership consolidation is a growing trend within the automotive retail sector. By the end of 2019, 70 per cent of dealerships were controlled by groups that own two or more stores, according to DesRosiers Automotive Consultants.

Ahmad also credited the company’s commission-based performance structure, similar to what a commercial real-estate agent charges a client to sell its building.

“The three main reasons we are successful are: our people, our process and commission structure that is both fair to our seller while ensuring they achieve maximum value for their business,” he said.

“I know that sounds so stupid, but dealers (have an attitude) if you make me more money, I will pay you more money. Dealers really resonated with us because we share that philosophy. We are willing to share in the risk of our client when they are selling their business.”

Maxime Theoret, DSMA CFO, said the company’s U.S. business helped bolster its bottom line.

“We expanded to the U.S. three years ago and that’s also helped us to increase our overall revenue because there’s a limited number of dealerships in Canada. The U.S. for us is still where most of the growth is going to come from in the next couple of years.”