Spring is Prime Time for Dealership Valuations. Here’s Why.
Maxime Théorêt, Managing Partner at DSMA
Spring generally coincides with the time of year when many motor vehicle dealerships complete their financial year. According to Maxime Théorêt, Managing Partner at DSMA, it is also the ideal time of year to take stock of the company. In the next few weeks, DSMA will be conducting close to 200 motor vehicle dealership evaluations across North America. Here are six good reasons for you to take action.
Know Your Business Inside and Out
Doing a regular assessment of your business is a lot like having your car serviced. No one wants any unpleasant surprises. A dealership evaluation is a preventive exercise that allows you to see the good (and not so good) practices of your dealership. It’s an exercise that highlights performance, but also flaws where your business can do better. This in-depth analysis of the dealership’s activities also allows you to detect business trends that you will want to pursue or improve, especially if you find that you are leaving money on the table. In short, this exercise, which takes an average of one to two weeks, provides a fair assessment of your business from every angle.
Be Better Equipped for Short, Medium and Long Term Planning
No matter what stage of your professional life you are in, an annual business valuation is an indispensable tool for clear and precise planning of your business activities. It is essential to know the real value of your dealership in order to establish a strategic growth plan or to properly plan your succession. As a matter of interest, among the thousands of appraisals DSMA has performed over the past ten years, there have been several occasions when our results have shown a 20-30% difference in value from what a dealer thought he was worth. A difference that could be higher, but very often it was lower than what the dealership manager expected.
Be Prepared to Sell…or Buy
Transactions between dealerships can already be complex, but the current economic climate (inflation, rising interest rates, risk of recession…) makes negotiations even more difficult. All the more reason for a dealer in expansion mode to have a clear and precise balance sheet of his business or businesses. This balance sheet is your best asset before approaching investors and financial institutions that can help you realize your ambitions. On the other hand, the dealer who is in sale mode will be much better equipped to deal with potential buyers by having the net worth of the business.
Why wait for an event, a crisis in the industry and the markets to occur before reacting? By conducting a regular valuation of your dealership, you are being proactive. It shows that you’re ahead of the curve in terms of what the company can expect. Proper knowledge of the dealership’s true value usually helps you deal with various industry crises…or better yet, prevent them. And your financial partners love that!
Be Prepared for the Unexpected
A separation, divorce, death…these events can occur at any time on a personal level and can greatly affect the day-to-day operations of your dealership overnight. If this happens, having an assessment of your dealership’s true value helps you maneuver through these types of challenges.
Maximizing Dealership Value
Finally, you can’t grow your dealership if you don’t know its true value. At DSMA, we have the trained staff and sophisticated tools to fairly and accurately value all North American motor vehicle dealerships, regardless of market or location. With our QUOTUS™ tool, a confidential and secure digital platform developed over the past four years, we are able to evaluate the dealership in every respect. It is the most reliable automotive market intelligence in North America that allows you to maximize the value of your dealership. It’s an essential tool that benefits not only automotive dealers, but also those in the motorcycle, trucking, agriculture, marine and heavy vehicle industries. Why go without?