It’s a simple question, would you let a vet fix your teeth? Yes, No? They are both doctors, right? Ok, let me ask you another question, would you let a plumber fix the wiring in your house? They are both maintenance experts, right? I would hope that the answer you’re giving to both questions, is “no”, of course not. So, if that’s the case, why would you risk the sale of your most prized asset, the business you’ve built up over many years, to the wrong type of professional?
One of the most common questions I’m asked by Dealers is “why do I need to use an M&A firm to assist me in selling my store? I am a car dealer, I think I know how to sell.” The answer is simple, you may be the best car sales person in the World but selling a car and successfully running your business is completely different from selling your business. You need the right type of professional, a buy/sell expert.
M&A firms, such as Dealer Solutions Mergers and Acquisitions (DSMA.com) offer dealers the professional experience that helps mitigate the risk of selling your business and falling short of the business’s true potential.
Here are some of the top benefits of using a dedicated automotive M&A firm (or of using a dentist to fix your teeth):
- Accurate and Realistic Valuations. One of my biggest frustrations is when dealers decide to use their accountant to sell their dealership because the accountant believes they can get more money for the business. Remember the question about using a vet to fix your teeth, this is a perfect example of that in action. Your accountant can value your business, but they don’t understand the nuances that specifically effect the value of automotive businesses. What the dealer is in effect doing here is risking their staff finding out about their desire to sell and wasting time. Also, when the accountant fails to sell the store and the dealer calls me to take the sale back, we must unwind the damage the over valuation has done in the market. Professional M&A firms are specialists is producing accurate and realistic valuations, so trust their opinions.
- Extensive Reach to Buyers. DSMA’s clients get access to the largest list of qualified buyers in North America. With the number of independent stores shrinking and medium to large sized groups growing, the perfect buyer for your business may not be in your local market, in fact, they might not even be in your country. Using an M&A firm with the scale of DSMA gives you access to the reach you need to maximize the return for your business. Accountants and Real Estate agents simply can’t bring that to the table.
- It’s essential that your desire to sell is kept fully confidential, not just from the staff at the store, but also from the local market and even the OEM. Professional M&A firms have the processes and procedures in place to maintain your confidentiality right through the sale process.
- Buyer Pre-Screening. Most dealers, if not all, have at one time received a call from a broker saying “I have a buyer for your store. Interested?” That’s what I call the ‘lazy broker’ and they’re the ones that give our industry a bad name. DSMA pre-screens all potential buyers before they are given any details about the sale opportunity. It takes many years in the business to develop a strategic and qualified buyers’ database and it requires significant leg work and multiple meetings with potential buyers.
- A plan for every eventuality. DSMA has a network of locally based Associates with 1000+ combined years of experience in all facets of the automotive industry, from OEM experience, Banking experience and ex-dealers who sold through DSMA before joining the company. Having all this experience is priceless when unique situations come up in the selling or due diligence process. Let me give you a great example of this experience in action. We were recently selling a store where the OEM issued a nonrenewal dealer agreement letter during the due diligence period, which put a serious snag in the closing process. Because of our situational experience of that tactic by the OEM, we were able to maneuver through the issue professionally and engage the right legal counsel and manage the dealer to a positive conclusion resulting in a renewed dealer agreement. At the end, the dealer’s comment to me was “If I would have sold through my accounting firm and this situation came up, they would have had no clue how to address it like you guys did.” Again, don’t use a vet to fix your teeth.
Professional M&A firms like DSMA, don’t just benefit dealers looking to value and sell their business, they also play an important role for dealers and dealer groups in acquisition mode. DSMA understands the majority of businesses for sale across the market, due to our size and scale and we can direct buyers to the stores that best fit their needs, saving them valuable time and energy. DSMA can also support the groups to re-structure their portfolios and find buyers for their underperforming businesses.
So, remember, the next time you get tooth ache, don’t call your local vet, call the professional that can actually help you. When you’re ready to value or even sell your business, don’t call your accountant or real estate agent, call a professional M&A firm, call DSMA.
If you would like to discuss this article further or if you’d like more information about how an M&A firm would best suit your buying or selling needs, please reach out to me at [email protected].
