Knowledge is Power.Find the answers to the most common questions about buying or selling a car dealership and automotive dealership brokerage. Items like the selling process and timeline, guarding confidentiality, the need for a broker, the value of third party negotiations, our competitive fees and why you should select Performance Brokerage Services to represent you.
Selling Your Dealership
Why Should I Hire a Car Dealership Broker to Sell My Dealership?
Though selling a car dealership is not a difficult task, it is highly complex. A dealership often represents the majority of a family’s net worth and should be handled with extra care by a professional broker.
A car dealership broker manages the selling process to ensure a smooth, quick and confidential sale of your dealership. The advantages of using an experienced and reputable broker to sell your dealership will include:
- Guarding the confidentiality of your intent to sell.
- Maintaining deniability to your employees, competitors and the manufacturers by having an intermediary between you and your prospective buyers.
- Identifying hidden potential of your dealership and discretionary expenses that impact the goodwill value.
- Assisting you with establishing the asking price consistent with current market conditions.
- Marketing your dealership for sale nationally using a custom-tailored method of your choosing.
- Handling all inquiries through our corporate and regional offices, allowing you to focus on selling cars and your day-to-day operations.
- Identifying multiple qualified buyers by conducting a national search.
- Creating a deal flow, which will expedite the sale and firm or even elevate the price.
- Analyzing and weighing the terms of the various offers to the buyers’ profiles, as it is not always all about the money.
- Keeping the selected buyer’s feet to the fire to ensure proper momentum.
- Negotiating from a position of strength to maximize your dealership’s value through third party negotiations.
Once a suitable buyer is selected, we will draft a detailed offer to purchase, which will create a framework for the attorneys to work off, and will provide tested and proven guidance to minimize closing pitfalls.
“I can’t thank you enough for the professional way you handled our sale. In addition to outstanding counsel, your relationship with Ford made the process quick and painless. It’s invaluable to have an asset like Performance Brokerage to help, at anytime of the day, navigate this emotional event.”
– Steve Hallock, Seller, Fremont Ford, California
“It is a common misconception that the use of a dealer broker is an unnecessary expense. The role of a dealership broker can be invaluable at every stage of a transaction. It is my experience that the use of a knowledgeable dealership broker is money well spent.”
– Leonard Bellavia, Senior Partner with Bellavia Blatt & Crossett PC
Choose Performance Brokerage to Sell Your Car Dealership
Not all car dealership brokers are the same. Performance Brokerage Services has developed an exceptional reputation of integrity and ethical conduct. When working with us, you will benefit from:
- Over 25 years of experience in the automotive industry.
- Well over 700 successful transactions nationally.
- 90% closing rate.
- Success fee only and no reimbursement of costs. We get paid after you get paid.
- Fees as much as 50% less than the competition.
- Straight-forward and flexible agreements with no fine print.
- Relationships with hundreds of qualified buyers, national dealers, public companies and manufacturers.
- Our corporate office and regional offices to provide you national exposure and limit the risk of a local confidentiality breach.
- Our highly advanced selling process and negotiating skills.
- A vast network of industry related professionals available to you.
When you decide to engage our services, we will guide you through the selling process from beginning to end, ensuring that your goals are accomplished in a timely manner. We will be an integral part of your selling team, managing the process and allowing you to focus on your day-to-day operations.
We will also manage the personalities involved, ensuring buyer’s momentum, protection of confidentiality and continued fair negotiations. The sale process will yield multiple buyers, maximizing your negotiating leverage and allowing you to select a buyer from many whose offer best aligns with your unique goals.
Contact us today for a complimentary and confidential consultation. Even if you are only contemplating a future sale, it is best to begin planning your exit strategy and preparing your dealership now to maximize its value. Your initiative will help you sell your car dealership on your terms.
1. Befriend your client.
2. Lead your client with your expertise.
3. Put your client’s interests ahead of your own.
4. Under all circumstances, do the right thing.
5. Commission will follow.
We know you have a choice. We want to earn your business.
We pledge to do it right, every time, one client at a time.
“Their honesty, integrity and attention to detail are second to none.”
– Jeffrey Cappo, President, Victory Automotive Group, Wards Auto Top-50 Dealer
“Performance Brokerage is the most professional, honest and straightforward in the business. They work real hard for both sides to make the deal happen.”
– Oscar Bakhtiari, Bakhtiari Auto Group, California
“Performance Brokerage operates under a higher code of ethics and confidentiality.”
– Terry Laughridge, Terry Reid Hyundai, Georgia
“I place Performance Brokerage at the top of our industry with respect to running a trustworthy and professional dealership brokerage firm. Their follow up and attention to detail is the best in the business.”
– Greg Gilmore, President, The Apex Group, Texas
“I strongly recommend that you have Performance on your team to help in the negotiations. You will not be disappointed.”
– Michael O’Brien, O’Brien Automotive Group, Pacific Northwest
What are Your Fees?
At Performance Brokerage Services, we understand that when the fee is too high, it can interfere with the transaction. In response, we developed a competitive and reasonable fee structure.
- No upfront fees: We are paid a success fee only, upon the successful sale of your dealership. We get paid after you get paid.
- No reimbursement of costs: We cover all expenses including marketing, advertising and travel.
- Up to 50% less than our competitors: While offering unparalleled quality of service and a higher closing rate.
- Flexible and reasonable engagement agreements with no fine print.
- Sell-side representation rather than dual agency.
“The fee for your services was the best money I spent during my 43-year career.”
– KR Reinschmidt, Performance Chevrolet Buick GMC, Idaho
We Negotiate on Your Behalf from a Position of Strength
If you decide to take your dealership to the open market, you will most likely first offer it to your immediate and intimate circle of dealer friends, and/or your attorney and accountant to tap into their clients. To avoid alienating these prospects and in good faith, you will be expected to only negotiate with one buyer at a time. This substantially weakens your negotiating posture. Under this scenario, it becomes difficult to maximize the value without damaging a personal relationship or risk losing the most logical buyer.
Consider this hypothetical: The dealer across the street has been asking for a first look when you are ready to sell. Now the time has come, you meet with him confidentially and share your private data. If you haven’t heard back in a timely manner, do you call? Will your call be interpreted as desperation? Could this cause you to leave money on the table?
In contrast, consider third-party/arm’s length negotiations. Not only do we talk to more than one buyer at a time, we even tell them about each other in order to create a deal flow. A deal flow presents multiple buyers that ultimately push one buyer through.
The Deal Flow
• Ensures that you receive fair market value by firming or even elevating the price.
• Buyer’s decision to buy is validated knowing that others are also interested in buying your car dealership, especially if the ones looking are high profile dealers.
• A sense of urgency and the fear of loss are introduced, which expedites the buyer’s decision to proceed.
• Ensures buyer’s timely performance and continued fair negotiations, knowing that other buyers are on his heels should he waver, not follow through on his commitments or attempt to renegotiate the previously agreed terms.
“In less than 30 days, Performance Brokerage presented an offer from a qualified buyer. Confidentiality was carefully guarded during the entire transaction. Their professionalism was evident from our first meeting to closing. They did what we asked and what they said they would do. They delivered!”
– Ed J. McCarroll, South Tacoma Honda, Washington
The selling process yields multiple qualified buyers to choose from, depending on your goals. Since it’s not always all about money, you may also want to consider who will take care of your employees, negotiate in good faith, survive the closing and ultimately to whom you wish to hand over the baton and to carry on your legacy.
The sale of your dealership may represent the majority of your family’s net worth. It needs to be handled with care, diligence and expertise to protect and maximize the value.
“I was very impressed with how many prospects they worked in a 4 day period before they sold it.
– Blake Fulenwider, President, CDJR Dealership, Texas
Prepare Your Selling Team
If you are contemplating selling your car dealership, it is imperative that you select an experienced selling team to help you maximize your goals.
Components of Your Selling Team
The first step is to surround yourself with a selling team that will maintain your confidentiality, protect your interests and help manage the selling process. Your selling team is made up of:
Your Car Dealership Broker
We are here to manage the selling process itself, including, but not limited to:
- Guarding the confidentiality of your intent to sell.
- Identifying any hidden potential of your dealership and discretionary expenses that influence the goodwill value.
- Assisting with establishing the asking price.
- Marketing your store for sale.
- Identifying qualified buyers.
- Analyzing the multiple offers/buyers.
- Keeping the selected buyer’s feet to the fire to ensure proper momentum for a quick sale.
- Helping you to negotiate from a point of strength.
Further along in the sales process, we will draft the offer to purchase and provide valuable guidance to minimize closing pitfalls and inevitable issues.
Your accountant’s role is to handle the accounting/bookkeeping, tax consequences of the sale itself, calculate your post-closing “walk away” amount, assist with the due diligence process and any other accounting and tax advice.
Your attorney will handle the legal aspects of the sale, including but not limited to adding customary warranties and representations to the Letter of Intent, drafting the definitive agreements, interfacing with the DMV and government agencies, and ensuring that no issues will require your attention post-closing.
Performance Brokerage Services will involve your attorney and accountant early on in the process to create an environment of open communication and full transparency in our united efforts to accomplish your goals.
Your selling team is the cornerstone to a smooth, quick and confidential sale of your dealership. Each of your advisers will play an essential role in streamlining the process, allowing you to focus on selling cars and running the day-to-day operations.
“Buying or selling a dealership can be a very eventful experience. That is why smart dealers use professionals like lawyers, CPA’s and must use a qualified Broker. A good broker can sift through the emotions and concerns to help both sides come to a successful conclusion. I highly recommend Performance Brokerage Services to help you avoid the frustrations in the acquisition or sale of your new car dealership.”
– Spencer Young, Jr., Young Automotive Group, Utah
Benefit from Our Experience and Expertise
The principals at Performance Brokerage Services have over 25 years of experience in the automotive industry, well over 700 successful transactions nationally and a 90% closing rate.
Dealers often say, “the deal fell apart.” When engaging Performance Brokerage Services to assist you:
- We are the only party that could (legally) speak to both the buyer’s and the seller’s attorneys without a conflict of interest.
- We introduce customary terms and conditions from our hundreds of completed transactions.
- We ensure that buyer’s and seller’s wants and needs are represented, including any non-negotiables or deal breakers.
- We manage the personalities involved since deals often “fall apart” due to non-material issues.
- We move the process along, ironing out any inevitable obstacles along the way, and guide you on how to avoid common closing pitfalls.
Our extensive network of industry related professionals is made available to you, including accountants, attorneys, appraisers, manufacturers, and relationships with hundreds of registered buyers.
Headquartered in Irvine, California and supported by regional offices, our reach provides you national exposure with local representation. This offers the ability to bring out of state buyers, limiting the potential for a local confidentiality breach.
“Confidently, this deal never would have happened without the persistence, poise and reasoning of Performance Brokerage. They were upfront and honest throughout the transaction, providing experience as to what is customary in the buy/sell process. They never let the emotions of the parties stand in the way of a deal.”
– Dan Johnson, Metro Kia of Cartersville, Georgia
Car Dealerships Sold by Performance Brokerage Services, Inc.
Browse a list of our recent car dealerships sold.
Or browse hundreds of client testimonials to read about what others experienced while working with us.
How do You Guard Confidentiality?
We understand the sensitivity to confidentiality as it has been the cornerstone of our business for over 25 years. Your confidentiality will be vigilantly protected at all times during and post-transaction. No exceptions!
“Trust is something that is hard to find. My dealings with Performance Brokerage have always held the highest level of trust. In conversations with others about Performance, I hear the same, that their word is their bond. I hold them in the highest regard.”
– Alan Webb, Multi-Brands Dealer, Washington
To guard your confidentiality, we remove the selling process from your dealership and handle all leads and inquiries from our corporate and regional offices. We instruct prospective buyers to interact with us directly and do not grant them access to you, which helps avoid rumors and allows you to maintain deniability to your employees, your competitors and to the manufacturer.
Next, we require that a Confidentiality Agreement be signed prior to the release of any sensitive information concerning your dealership.
Furthermore, even after buyers sign a confidentiality agreement, they are explicitly admonished by PBS not to mention even the availability of the acquisition opportunity. Aside from the legal ramifications of breaching confidentiality, our buyers view PBS as a source of leads and understand that they risk jeopardizing their business relationships with PBS by breaching the terms of their agreements.
Throughout each step of the sale process, PBS will employ best practice to guard your confidentiality and ensure a discreet sale of your auto dealership.
Food for Thought
Confidentiality is equally important to the buyer, not wanting to risk a loss of employees. Most dealers understand that it is a team effort that makes a dealership successful and their retention is essential for a smooth transition.
How Long Will it Take to Sell My Dealership?
Using 25 years of data from our intermediary services and hundreds of completed transactions, the sales cycle from engagement to closing averages 6.7 months.
However, we often identify the best buyer rather quickly, and at times even reach definitive agreements as quickly as 30 days. Then, the only remaining unknown is the factory’s approval, which on average should take 45-60 days.
Some factors that may influence the speed of a sale:
- Straight-forward terms with as little “hair” on the deal.
- Flexibility, resulting in a larger buyer pool.
- Clean books and records, eliminating the need for a lengthy due diligence period.
- Reasonable asking price and inline with current market conditions.
- Motivation by seller, and broker’s identifying of a motivated buyer.
- Continuous fair negotiations by both parties.
- Involvement of an automotive attorney and accountant for added expertise.
- Involvement of an experienced auto dealership broker for added insight.
- Relationships with the factory to request an expedited approval of the buyer.
- Advanced preparation of your dealership for a future sale.
Buying a Dealership
What is for Sale in My Area?
We are asked this question daily. For sale used to mean “what do you have listed?”
The traditional brokerage model of building an inventory of listings has changed as dealers seek to maintain the deniability to their employees, competitors and the manufacturers. Additionally, brokers are notorious for taking on too many projects and not giving the client the attention that he/she deserves. However, these dealerships continue to change hands, either principal to principal or through their gatekeepers. Because of our vast network of personal relationships, we often get access to these “non-listed” opportunities.
In recent years, we shifted our business model to Strategic Buying on behalf of buyers, which has become a highly popular and effective approach to acquiring car dealerships.
Read about our Strategic Buying program to learn how we can help you find your next dealership.
“We had the pleasure of working with Performance Brokerage Services with our recent acquisition of two high line franchises. We identified the franchises and geographical areas we were interested in growing, and they quickly came back with several opportunities through their contacts that fit our criteria. We would not have known about these opportunities without their involvement. As a buyer in today’s competitive market, I highly recommend using Performance Brokerage Services to help you find targeted opportunities to grow your business.”
– Mike Dayhoff, Phil Smith Automotive Group, Florida
What is Strategic Buying?
Strategic Buying by Performance Brokerage is a custom-tailored service soliciting acquisition opportunities on your behalf only, targeting dealerships that are NOT listed for sale or may never become available.
While keeping your identity confidential, we will solicit specific stores, regions, markets and franchises of your choosing. This allows you to bypass the open market and analyze an opportunity without competition.
When contacting targeted dealers or their gatekeepers on your behalf, since they are familiar with our firm’s reputation, they trust that our inquiry is genuine and will be kept confidential.
Quality dealerships are rarely listed for sale. Dealers initially meet with their confidants (attorneys/accountants), who discretely offer the dealership(s) to preferred clients, if only to maintain confidentiality and deniability to their employees, competitors and the manufacturers. If taken to the open market, since buyers are in a relentless pursuit of those dealerships, a competition is created driving up the purchase price.
Utilizing the relationships we have cultivated in the automotive industry for over 25 years compounded with our reputation of honesty and integrity, the gatekeepers (attorneys/accountants) often allow us access to their clients’ dealerships before taking them to the open market.
“Their connections in the retail automotive industry have allowed them to present many excellent opportunities for our consideration over the years. Their combination of professionalism and friendliness are unmatched among their peers.”
– David Pollard, Berge Automotive Group, Arizona
What are the Benefits of Strategic Buying?
Strategic Buying offers you the opportunity to acquire dealerships not available for sale. It bypasses the open market, allowing you the time and room to thoroughly analyze an opportunity, and make a decision to pass or proceed without extraneous variables or competition.
The Strategic Buying program offers comprehensive services to provide a rewarding experience for you:
- Confidential consultation.
- Personal and custom tailored solicitations.
- Exploration of acquisition options.
- Complimentary valuations.
- Strategic regional or national searches.
- Intermediary services once potential sellers are identified.
- Transactional support until the deal is closed.
- Loyal, dedicated and unwavering representation on your behalf.
- Vigilant protection of confidentiality during the process and after.
You cannot afford missing out on a premier or synergistic opportunity. Whether it’s across the street, perhaps one you have been courting, or the one in your contiguous market if only to protect your flank.
Don’t wait for a broker to call you with an opportunity where you will then be subject to unfavorable environments. Be proactive and contact us today for a consultation. Your initiative may get you your next dealership on your terms.
What Will Strategic Buying Cost Me?
Performance Brokerage Services charges no upfront fees and does not expect reimbursement of any costs. We get paid a success fee only after the transaction is closed and you are in possession of your new dealership.
Our fees are as much as 50% less than our competitors, understanding that customer satisfaction leads to repeat business and referrals. Your satisfaction is our top priority.
For over 25 years, we have been a leading auto dealership broker, recognizing that our greatest assets are our reputation, industry relationships and satisfied clients.
“Performance Brokerage helped me find my first dealership and have always treated me like family. They were there after the sale checking in on me and were there when I changed directions to help me find a second dealership. I firmly believe that the fee paid is well worth it and will come back to you tenfold.”
– Chris Gadzia, Coos Bay Nissan, Oregon
Reasons for Our Great Success
During our 25 years of experience in the automotive industry, we learned that getting access to these premier opportunities begins with having a trustworthy reputation and intimate relationships with the dealer body and their gatekeepers of attorneys and accountants.
Reluctant to take a dealership to the open market in fear of a confidentiality breach, these gatekeepers often request our assistance in providing qualified buyers for their clients’ stores. By utilizing our Strategic Buying program, you will be granted access to these exclusive opportunities.
Dealers are constantly inundated with blind solicitations from brokers, attorneys, accountants, vendors, and other car dealers who make all kinds of false promises. When we contact a potential seller or gatekeeper, however, they recognize our company name and our reputation of integrity, and are confident that our inquiry is not just another ruse.
“I had no plans of selling my car dealership, but the letter I received from Performance on behalf of their buyer intrigued me…”
– Bill Rogers, Seller of Bill Rogers Honda, Oregon
“It amazes me how they have a working relationship with so many dealer principals and even a firsthand knowledge of most of their businesses.”
-Chuck Holder, Holder Ford, California
14 Steps to Selling
Complimentary Consultation and Site Visit
The sale of a new car dealership often seems like a daunting task. Though it is not a difficult process, it is highly complex and requires a seasoned professional. With over 25 years of experience and over 700 completed transactions, we have the expertise that you need to accomplish a successful, smooth and confidential sale of your dealership, while still realizing highest price.
Tap Into Our Years of Experience
During your complimentary consultation, you will have the opportunity to tap into our experience/expertise and learn about the 14-Step Selling Process. You will also receive a preliminary valuation of what to expect should you decide to take your dealership to the open market today.
A multitude of factors have to be taken into consideration. We will discuss those during our consultation. If only for example, items like:
- Current Market Condition: Is the current market condition in favor of an immediate sale? Even factors not directly related to the auto industry impact the current market condition and your dealership’s value.
- Franchise Desirability: Manufacturers’ plans and requirements constantly change, brands’ desirability rise and fall regularly, and franchise penetration and strength varies from market to market. Naturally, these factors and others cause the intangible value of your dealership to fluctuate.
- Geography: A factor that is often overlooked by other professionals offering consulting advice and evaluations. Our experience has proven that geography dramatically influences the value of your dealership.
- Financing Availability: For over two decades, we have witnessed financial institutions waver in their desire/appetite to get involved in the automotive sector. Clearly, the banks’ liquidity highly influence the intangible value of dealerships, since goodwill/blue sky are greatly subjective and offer no collateral.
- Timing: Even if the market conditions appear ripe, the timing of selling your dealership might not be. Our team will help you assess your current situation and determine the optimal time to go to market.
Are you and your dealership ready for a sale? Are the books ready for due diligence? Is the dealership in compliance with local and franchise bylaws? Will your employees be protected in the event of sale? Have you considered the tax consequences? Will your confidentiality be protected? Have you considered how you will spend your free time? Are you going to miss the business? Perhaps a sale over time with a planned exit is more suitable for you.
Ask us those questions and more. If you have a question that you need answered, consult with one of the leading brokerage services in the auto industry. We can provide the knowledge you need to prepare your dealership for a future sale, ensuring a smooth transition when the time is right. If necessary, we will also recommend other industry-related professionals to become a part of the Selling Team who will assist with the selling process, your walk-away amount after the sale, and offer proven methods to avoid the inevitable last minute surprises.
The On-Site Visit
As the next step, we will schedule an in-person meeting and on-site visit to tour the facility and help you identify areas that could improve or detract from the value of your dealership. Items like:
- Image-Compliance: Does your facility meet the manufacturer’s latest standards?
- Expansion: Could additional franchises be added to your operation?
- Competition: How strong is your facing competition? Your market in general? How well does your franchise(s) perform in your area vs. nationally?
- Curb Appeal: Does your dealership possess the “wow factor” for prospective buyers?
- Review Other Assets: Used cars, leasehold improvements, adjacent parcels, and fixed assets to advise best utilization of those assets for preparation of a sale.
What is the Preferred Course of Action?
After the consultation and site visit, you will have ample data to help you determine the next course of action, which may or may not be an immediate sale of your dealership. If you decide that now is the time, our team will help you establish an asking price that is consistent with current market conditions. Once we engage, we will help you to develop a custom-tailored marketing strategy and assist in identifying suitable buyers to accomplish a confidential and rewarding transaction for you.
If you are not interested in selling yet, we encourage you to reach out to us to discuss the items mentioned above and more, and to prepare your dealership for a future sale, improving its long-term value.
Engaging Performance Brokerage Services
When you engage Performance Brokerage Services, you’re engaging one of the nation’s leading auto dealership brokerage firms. We pride ourselves in our quality of service and our dedication to each of our clients. For over 25 years, the key principals have a strong record of selling over 700 new car dealerships nationwide.
The benefits of engaging Performance Brokerage Services to assist in the sale of your car dealership include in part:
A Competitive Fee Structure:
- No upfront fees: We are paid a success fee only, upon the completion of a sale of your dealership. We are paid only after you are paid.
- No reimbursement of costs: We cover all expenses associated with selling your dealership, including marketing, advertising and traveling.
- Up to 50% less than our competitors: While offering unparalleled quality of service and a higher closing rate.
Upfront and Transparent Agreements:
- Straightforward language without fine print.
- Flexible and negotiable terms.
- The right to terminate upon request as we strive to deliver 100% client satisfaction.
What to Expect Upon Engagement:
- We will introduce you to our brokerage team, who will manage the sale of your dealership.
- After thorough analysis of your operation and other various influencing factors, we will assist you in establishing the asking price.
- We will include your automotive attorney and accountant early on to ensure that your best interests are protected. If you don’t have an automotive attorney or accountant, we can recommend one to you in your area.
“I just want to thank you as looking back I can honestly say without your services to break the fog of selling a dealership, it never would have happened. The fee for your services was absolutely the best money or investment that I have made in my 43 year career.”
– KR Reinschmidt, Seller of Performance Chevrolet Buick GMC, Idaho
Information Gathering & Marketing Plan
Showcasing your dealership in the best possible light and properly packaging it for a sale helps to attract a larger pool of prospects, as well as get the attention of the serious/seasoned buyers. Extensive data is required for a buyer to effectively analyze the acquisition opportunity, build his/her own pro-forma and make an educated decision to purchase or pass.
To save you time, we will provide you with a thorough questionnaire for your completion and a list of requested materials that buyers typically expect. We will gather all of the information when we first engage to avoid back and forth communication, retrieving of confidential documents from the dealership, and distracting you from your day-to-day operations.
Once all of the information is received, which should only take 2-3 days, we will compile the information into a comprehensive and professional marketing prospectus that will be easy for buyers to digest. This prospectus will of course be available for your approval before disseminating any information to prospective buyers. Such prospects will have already executed a Confidentiality Agreement, approved by you and/or your attorney.
By the use of such a prospectus, the selling process is removed from the dealership and handled from our regional offices, allowing you to continue to focus on running and maximizing your business.
If the buyer passes, we admonish him/her to destroy any materials received and not to mention even the availability of your dealership for sale.
Having worked in the trenches daily for over 25 years, we have developed an extensive database of qualified buyers relentlessly seeking dealerships for sale. Our proprietary database includes over 2,000 registered buyers and over 40,000 industry-related professionals. We also have relationships with the nation’s largest private automotive groups, all of the public companies, and the larger regional dealers in metropolitan and fringe metro markets.
Utilizing our offices nationwide, PBS will attempt to find the “Unique Buyer” for your dealership, since unique buyers pay more for a number of strategic and synergistic reasons.
When deciding on a marketing strategy for locating a buyer for your dealership, you must consider the relationship between exposure and confidentiality. Naturally, the greater the exposure, the greater the potential for a confidentiality breach.
We are often able to identify the unique buyer without executing a broad-reaching marketing or advertising campaign. However, if confidentiality is not a grave concern and if the only goal is to maximize the value of your dealership, a mass exposure may be recommended.
Understanding that confidentiality is one of your top concerns, we will elaborate during our in-person meeting on the balance between exposure and confidentiality to determine the best marketing approach for you.
It is essential that the buyers in receipt of your sensitive information have been pre-qualified.
Performance Brokerage Services screens buyers based on a number of criteria, which in part include:
Financial Capacity: Verifying sourcing of funds and personal financial wherewithal.
Manufacturer’s Required Debt to Equity Ratio: The buyer must invest the required amount of cash in relation to the amount of debt borrowed.
Protecting Confidentiality: Understanding the sensitivity to confidentiality—as it is the core of our business—we will decline working with buyers who might endanger your confidentiality.
Good Faith Negotiations: Unforeseen issues will inevitably arise. Our goal is to find a buyer who will stick to the terms of the agreed upon deal, or if further negotiations are required, one who will, at the minimum, negotiate in good faith to iron out those issues.
Surviving the Closing: Often an emotional period, coupled with buyers’ and sellers’ remorse as the deal is at its last stage. Keeping this in mind, we will attempt to find the unique buyer who will have sufficient motivation to accelerate the closing, rather than second guess it.
Approvability by the Manufacturer: Of course we elect to only work with buyers who we deem qualified to receive manufacturer’s approval. Items include: experience, capacity, sales effectiveness, CSI and SSI, and the like.
We understand the sensitivity to confidentiality as it has been the cornerstone of our business for over 25 years. Your confidentiality will be vigilantly protected when working with Performance Brokerage Services. No exceptions!
This important topic of confidentiality is covered in detail under Guarding Confidentiality.
Dissemination of Information
Performance Brokerage Services rigorously controls the dissemination of information related to your dealership, and only releases financial data to buyers who we deem qualified and who have signed a Confidentiality Agreement.
During the initial marketing of your dealership, the only information that is typically released is the franchise of your dealership and the state in which it is located. If the buyer has a continued interest, further information is released in stages, on a “need to know” basis.
Once we identify a qualified and interested party and have obtained a signed Confidentiality Agreement, the prospect will receive an Executive Summary highlighting the salient points about your dealership for sale. Only once an above average interest is demonstrated by the buyer, will the comprehensive marketing prospectus be sent for further analysis.
At this point, the buyer will have sufficient data to make an informed decision about whether or not to continue with his/her analysis.
Scheduling Site Visits
When Performance Brokerage Services is engaged to manage the sale of your dealership, we handle the majority of the process outside the confines of your property. However, once a buyer thoroughly analyzes the opportunity and wishes to write an offer, we will request that you accommodate an in-person meeting. This will give the buyer the opportunity to tour your facility and ask questions that you are best suited to answer. Items like: employees, demographics, local competition and advice on tapping into the unrealized potential of your dealership.
Prior to the meeting, we will instruct the buyer to:
- Strictly discuss the operation itself, not price or terms.
- Never approach the dealership without your prior approval.
- Arrive in a car with no markings identifying it as a dealer vehicle (no dealer plates).
- Dress in attire that will not draw special attention (no dealer-branded apparel).
- Avoid interaction with your employees. We will even coach the buyer how to speak to employees if necessary, providing them with a backstory.
PBS will only request a site visit from you when we determine the buyer’s interest as above average and deem the site visit to be the last remaining step before writing an offer.
Selecting a Buyer
Once all offers have been received, Performance Brokerage Services will assist you in selecting the right buyer for your dealership, weighing the various components of each buyer and their offers. Caution…often, it is about more than just the money.
- Approvability by the manufacturer – This is an essential and often overlooked aspect of selling your car dealership. Having done it hundreds of times, we know what the manufacturers are looking for in approving a candidate.
- Good faith negotiator – A buyer who will stick to the terms of the LOI and will not attempt to renegotiate.
- Willingness to compromise – During the selling process, inevitable issues will arise beyond the LOI that will require additional negotiations. It is crucial that we select a buyer willing to iron out these issues with a compromising nature, rather than terminate the deal.
- Protecting confidentiality – A buyer that will protect confidentiality at the highest level to avoid jeopardizing the deal or impacting your business.
- Caring for your employees – Does the buyer intend to retain your employees?
- Carrying on your legacy – Often overlooked in today’s impersonal business environment, is the buyer a person that you feel comfortable with continuing your legacy?
“With very little preparation and input from our side, Performance Brokerage brought us six excellent offers. They wisely counseled us to accept an offer from one of the six buyers who, as they predicted, proved able to close the deal with no financing contingencies and no downward adjustments in the sales price. Given this marvelous result in an incredibly challenging business transaction, I confidently recommend Performance Brokerage Services when you or your client are selling an automobile dealership.”
– Evan O. Thomas, III, Attorney
Letter of Intent
Once you select best buyer, we proceed to secure a fully executed Letter of Intent (LOI). The buyer’s proposed LOI will be further fine-tuned to better suit your specific needs and desires, including customary warranties and representations to protect your interests. Since LOI’s are typically non-binding by nature and often coupled with attempts by buyers and attorneys to renegotiate the deal, our LOI is detailed and comprehensive to serve as the framework for the attorneys to prepare the definitive Asset Purchase Agreement (APA) consistent with the terms agreed upon in the fully executed LOI.
You are now entering into definitive agreements with the buyer. This is the last opportunity for you to flex your negotiating posture and leverage, if needed. It is essential that you have secured your selling team by this stage to protect your interests (an automotive attorney, accountant and an experienced car dealership broker).
Having worked on hundreds of definitive agreements over 25 years, the principals at Performance Brokerage Services have seen it all. I.e. buyers attempting to renegotiate price and terms, attorneys introducing items not previously included in the LOI, requesting from you unreasonable indemnifications, evaluating tangible assets with methods disadvantageous to you, etc.
When applicable, PBS will advise you and your attorney in countering unreasonable requests by buyer and buyer’s counsel, continue to manage the selling process to ensure buyer’s momentum, and ultimately ensure a smooth and accelerated closing.
If you are in need of an automotive specific attorney or accountant, we can recommend one to you in your local area. Our national network of industry related professionals is extended to you upon becoming a client of Performance Brokerage Services.
Well, we agreed on a price, now what?
You often hear about deals that “fell apart” from your 20 group, dealer friends or at the car auction. What exactly “fell apart”? Thinking they have a deal, this is usually a result of two parties reaching an impasse after having only come to terms on a purchase price. The deal remains dynamic and requires continuous managing and massaging. Far more complex than price and terms are the minutiae of the deal, the finer terms of the definitive agreements and handling the personalities of the principals.
We remain involved and by your side, continuing to interact with both principals and their advisors, bringing experience, expertise and a voice of reason to the selling process, ironing out the inevitable issues that arise.
The deal has now risen to its final critical phase, the due diligence stage.
If it has not already taken place, the buyer will usually request an in-person meeting with you to ask questions that you are best suited to answer. Examples could be regarding: employees, demographics, local competition or even advice on tapping into the unrealized potential of your dealership.
Subject to the agreed scope of the due diligence, you may be required to grant the buyer access to your dealership for a physical inspection of purchased assets, and provide additional data substantiating representations made during the negotiation process. At this juncture, buyer may also request to review items like:
- Appraisals of real estate and/or leases
- Dealership’s DMS
- Third-party contracts and leases that buyer will be required to assume
- Site surveys and/or Phase I and II studies
- Compensation plans and benefits for employees
- Parts and accessories inventories
- Used cars on hand
- If any, verbal or written demands by the factory for facility improvements
You will be expected to open up your books with full transparency, however Performance Brokerage Services will guide you at that time as well to make sure that the buyer’s requests are customary and within reason for a transaction of that nature.
Submitting Buy Sell to Factory
The buy/sell has been signed and the buyer conducted due diligence. How do I notify the factory?
The final stage before the actual closing is getting approval for the transfer of ownership from the manufacturer. At this stage, Performance Brokerage Services will help you submit the definitive agreements to the factory for their approval, along with a cover letter granting permission for the factory to speak with your buyer. Without this letter, the factory would be in breach of your Sales and Service Agreement should the factory discuss your business with anyone but you.
The approval process typically ranges from 45-90 days, starting from the date that the factory receives all the required documentation of the buyer’s application. To protect your right to sell your dealership, certain state laws guard you from unfair dealings by the manufacturer, such as an unreasonable denial of an applicant or a negligently delayed closing. If the manufacturer fails to approve or reject the applicant, some state laws deem automatic approval after 60 days. During the approval period, the manufacturer will either approve or reject the prospective buyer, or as we have seen more often lately, exercise its Right of First Refusal and award the dealership to a candidate of their choice.
The factory exercised its Right of First Refusal: What does this mean to you and what happens next?
In the event the manufacturer exercises its Right of First Refusal, the manufacturer chose to reassign the dealership to another buyer. The law states that the manufacturer’s assignee must then fulfill all terms and conditions of the executed buy/sell agreement that you submitted. Additionally, the performance of the assignee is guaranteed by the manufacturer. Therefore, you will be made whole, receiving in full the purchase price and all other terms agreed upon in the buy/sell.
Factory Approval and Closing
After the factory responds with its approval, don’t relax just yet, as we still have to get the deal closed. The finer terms have been ironed out and escrow has been opened and partially funded. At this point, the remainder of the process is mostly administrative. PBS will help facilitate the closing process to ensure a smooth and successful transition.
Performance Brokerage Services will work with both you and the buyer to select the most convenient closing date to minimize disruption of the operation, and to accommodate the flooring companies/bankers, attorneys, accountants, etc. We will also assist with mapping out the closing process and managing any additional outstanding items.
Among the transfer of assets and ownership from one company to another, all leases and contracts must be assumed by the buyer and a rehiring of all existing employees must also take place. The buyer will interview each of your staff, and will generally request your assistance and insight. This is vital for a smooth transition, will maintain the goodwill of the dealership and will help retain as many of your employees as possible.
Congratulations, you have sold your dealership! Hopefully it was done in a timely fashion, your legacy will continue with the right buyer, you received your desired price, and you can now relax and enjoy your semi-retirement or other business endeavors.
TELEPHONE 949.461.1372 FAX 949.461.1358