Frequently Asked Questions

Knowledge is Power

Selling Your Dealership

Why Should I Hire a Broker?
A dealership often represents the majority of a family’s net worth and should be handled with care by an experienced broker. We actively manage the buy-sell process from beginning to end to help you establish an asking price consistent with the current market conditions and latest trends, develop a custom-tailored marketing strategy to identify the buyers most qualified to satisfy your specific goals, negotiate from a position of strength to maximize the value of your business, guarding your confidentiality, guide you through the complexities of the transaction while ensuring that your best interests are protected, and assist with the due diligence stage and through the closing. We are a full-service brokerage firm, by your side, every step of the way.
Why Is PBS Different?
With PBS, you can expect the full force of a powerhouse brokerage firm with a personal touch. We simply operate differently.

  • Family-owned and operated, we ensure that every client gets the proper attention he or she deserves, treating our clients like we would our own family.
  • Our reputation is governed by the highest level of integrity and ethical conduct. These core values run deep throughout our firm and are the foundation for our success. As such, you can trust that your best interests are always at the forefront of our actions.
  • Understanding these are life changing decisions, we take a no-pressure approach.
  • We charge a success fee only with no upfront fees and no retainers.
  • Our engagement agreements are straight-forward, flexible, and with no fine print.
  • We do not hoard listings to build an inventory.
  • We work hard to accomplish the unique goals of our clients.
  • With a 90% closing rate, we actively manage the process to ensure its success.
  • We provide regular updates on activity flow and expert guidance at every step.
  • Having genuine care for our clients, they often become our friends in the end.

  • Your satisfaction is our top priority and you will not be disappointed. Experience the difference!
    What are Your Fees?
    While providing an unmatched quality of service and a higher closing rate, we offer a competitive and reasonable fee structure. We do not charge any retainers nor upfront fees like most other brokerage firms. We do not expect any reimbursement of marketing or travel costs. We charge a success fee only, paid at closing and after you are paid.
    How do You Maximize Value?
    The sale of your business is the last opportunity for the assets to generate income for you. We work hard to maximize the value on your behalf.

    Earnings Adjustments: We adjust the earnings to reflect discretionary and one-time expenses, which enhances the profit represented. We evaluate the upside potential, a host of intangible variables, and the market trends that may further influence the value.

    Asset Adjustments: Accounting for accelerated depreciation, assets that are not booked, and varying valuation methods, the value of your assets may be significantly higher than they are booked.

    Expert Negotiations: We negotiate on your behalf from a position of strength as industry experts with local market familiarity and an unmatched amount of data from national transactions.

    The Deal Flow: Creating a competitive environment among multiple buyers 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 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. It 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.
    How Long is the Process?
    After hundreds of dealership sales, the sales cycle from engagement to closing ranges on average from 6-8 months. 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 to minimize pitfalls.
  • Relationships with the factory to request an expedited approval of the buyer.
  • Advanced preparation of your dealership for a future sale.
  • 10 Steps to a Successful Sale

    1. Assemble Your Selling Team
    Dealerships often represent the majority of one’s net worth, and a sale will be the last opportunity for the assets to generate income. It may also represent a lifetime of dedication or a multi-generational family legacy.

    The 10 steps below outline a traditional asset sale and provide you with insight into the buy-sell process.

    The first step is to surround yourself with a selling team that will maintain your confidentiality, protect your interests, manage the selling process, and ensure a successful outcome. Each advisor plays an essential role in managing and streamlining the process, while allowing you to focus on your day-to-day operations.

    Buy-Sell Attorney: Handles the legal aspects of the sale, including but not limited to drafting the Definitive Purchase Agreements, incorporating customary warranties and representations, interfacing with the DMV, government agencies and the OEMs, addressing any outstanding liabilities, and limiting your exposure post-closing. It is beneficial that your attorney has buy-sell experience in the RV or automotive industries.

    Accountant: Handles the accounting/bookkeeping, including but not limited to preparing the adjusted earnings, introducing creative structures to mitigate the tax consequences of the sale itself, calculating your post-closing “walk away” proceeds, assisting with the due diligence, and any other accounting and tax advice.

    Financial Planner: Shows you a path to manage the proceeds post-sale and attain your financial goals. It may be advantageous to engage a planner earlier in the process to assist with allocation and/or deal structure.

    Dealership Broker or Buy-Sell Advisor: Manages the sale process from beginning to end, including but not limited to guarding the confidentiality of your intent to sell, providing a valuation so that you may establish an asking price consistent with the market conditions, marketing the dealership for sale, drafting Letters of Intent, and helping you negotiate from a position of strength.
    2. Information Gathering
    The next step is to gather the information required for a buyer to effectively analyze the acquisition opportunity, build a pro forma and make an informed decision to proceed with an offer. The information typically expected includes:

    Financial Data: Dealer operating statements, accountant-prepared statements, and adjustments to income.

    Real Estate: Appraisals, leases, property layouts, environmental studies (Phase I & II), and property tax statements.

    OEM Data: Sales & Service Agreements, franchise agreements, performance reports, primary market area, area of responsibility, etc.

    Fixed Assets: Depreciation schedule or fixed asset list.

    Organization: Description of employees, pay, benefits, union details if applicable, awards and recognitions, etc.

    Long-Term Contracts: Long-term equipment leases, DMS and vendor contracts expected to be assumed. Be sure to review and understand your contracts, specifically your payment obligations, your right to terminate and your total exposure as these will become material items during negotiations.

    Your Dealership Broker will incorporate the materials to prepare a Confidential Information Memorandum. The goal is to showcase your dealership in the best light possible with an easy-to-read synopsis. It should provide enough data for a buyer to analyze the investment opportunity, while also withhold your private and proprietary information until the buyer shows an elevated level of interest. The Memorandum will help to attract a larger buyer pool, plus regional and national dealership groups. Your Dealership Broker will setup a virtual data room where the information will be securely stored and made available to prospective buyers who have signed a Non-Disclosure Agreement.
    3. Custom-Tailored Marketing Strategy
    You and your Dealership Broker will develop a custom-tailored marketing strategy to maximize the likelihood of attaining your goals while minimizing your risks.

    What are your goals? It is not always all about the money. Will the buyer maintain confidentiality? Negotiate in good faith? Survive the closing? Take care of your loyal employees? Continue to employ your family members? Carry on your legacy?

    Greater exposure naturally yields more buyers, which will increase the likelihood of a sale, firm up the asking price and introduce a sense of urgency. However, if greater exposure raises your concern of a confidentiality breach, you may be better suited with a more tactical “private showing” approach.
    4. Buyer Filtration
    Unique to the industry is the requirement for OEM approval. The goal is to locate a buyer who meets your criteria and that of the OEM:

    Pro Forma Buyer: Makes an offer based on future potential, and not strictly past performance.

    Financial Capacity: Sufficient funds and financial wherewithal.

    Debt to Equity Ratio: OEMs and lenders will require a specific amount of cash in relation to the amount borrowed.

    Confidentiality: A buyer who appreciates the sensitivity to confidentiality.

    Good Faith Negotiations: A buyer that will not attempt to renegotiate or “re-trade” the deal when unforeseen issues inevitably arise.

    Surviving the Closing: Although the process is often emotional and coupled with doubt or second-guessing, a buyer who has strong motivation to accelerate the closing.

    Business Acumen & Ethics: Experience, character, etc.
    5. Letter of Intent
    An offer to purchase is usually in the form of a Letter of Intent (“LOI”). The purpose of the LOI is for buyer and seller to come to an agreement on the primary terms and conditions. It is ideal for the LOI to be detailed so it may serve as a framework for your Attorney to negotiate the Definitive Agreements. Although the LOI is non-binding, certain items included are binding like Confidentiality and Exclusivity. The LOI will typically include, but not be limited to, the following items:

    Goodwill: Intangible assets, commonly referred to as “blue sky.”

    FF&E: May be appraised, negotiated, or at net book value.

    Inventories: New vehicle, used vehicle, parts & accessories, miscellaneous.

    Real Property & Improvements: Purchased or leased.

    Assumed Obligations: DMS and other vendor contracts and leases.

    Due Diligence: A period of 30-60 days.

    Deposit: Often refundable until completion of due diligence period.

    Confidentiality: Negotiated terms will be kept confidential.

    Exclusivity: Seller shall not negotiate with parties other than the buyer.

    Not all offers are equal, even if the goodwill is the same. It is important to conduct a total deal review, weighing all terms and conditions of the LOIs as well as the buyer profiles. One buyer may have a greater likelihood of surviving the closing, while one LOI may offer a unique term that better fits your goals.
    6. Definitive Agreements
    Upon full execution of the LOI, the period for Exclusivity will commence and you will be expected to continue negotiations with the selected buyer only.

    Your Attorney (or buyer’s attorney) will prepare the initial drafts of the Definitive Agreements, also referred to as an Asset Purchase Agreement (“APA”) and Real Estate Purchase Agreement (“REPA”). These agreements and the terms included are definitive, binding and enforceable. A stock purchase is less common due to buyers’ reluctance to assume liabilities.

    The Definitive Agreements will expand upon the LOI and typically include, but not be limited to, the following items:

    Purchase Price Allocation: Tangible and intangible assets, non-compete, real property, and inventories.

    Indemnities: Customer and creditor claims, environmental and hazardous conditions, payroll tax, sales tax, etc.

    Representations and Warranties: Financial statements, title, liens and condition of assets, litigation, employment matters, tax matters, etc.

    Closing Conditions: Financing, OEM approval, issuance of DMV license, etc.

    Closing Date: Targeted closing date to ensure expeditious performance.

    Escrow Funds and Holdbacks: Buyer may request a portion of funds held back in escrow to cover chargebacks or damages caused by untrue representations and warranties.

    Termination or Failure to Close: In the event of a breach, deposits may become non-refundable.

    Schedules and Exhibits: Excluded assets, employee charts, inventories, fixed assets, etc.

    This process requires multiple rounds of back and forth between the attorneys to reach a fair and equitable outcome for both parties. The use of a more detailed LOI will reduce the risk of a deal stalling.
    7. Due Diligence Period
    The length of the period is negotiated and usually ranges from 30 to 60 days. You may elect to have the period begin upon full execution of the Definitive Agreements, or upon full execution of the LOI and to occur simultaneously to the negotiations of the Definitive Agreements.

    This period is critically important to the success of a transaction. The buyer will be granted the right to inspect the books and records to verify financial representations, assets, inventories, real property and improvements, contracts to be assumed, etc.

    It is also the stage when appraisals are ordered, public reports are pulled, and examinations are conducted. Items like real property appraisals, building inspection, fixed asset appraisals, inventory counts, title reports, Phase I and Phase II environmental studies, etc.

    If it has not yet occurred, buyer will typically request an in-person meeting to discuss the operation in greater detail and to tour the dealership(s).

    Once the buyer completes the due diligence and waives the due diligence contingency, you will notify the OEM of your intent to sell.

    Although you have come to terms with the buyer, you should continue to run your dealership and maintain its performance. It can take another 60-90 days until you reach a successful closing and a downturn in performance might impact your sale or the purchase price. With good intent, continue to hire employees as needed (buyer is in need of good talent), do not defer maintenance and stay involved in the day-to-day operations.
    8. OEM Approval
    It is good practice for your Attorney to submit the APA and the REPA to the OEM(s) along with a cover letter authorizing the OEM(s) to communicate with the buyer.

    Once buyer has received approval from the OEM(s), you may elect to make the announcement to the employees and introduce the buyer. This will help to quiet rumors, settle employee concerns, and ensure a smooth transition.

    At this time, buyer should apply for DMV and other required licenses. In certain states, a bulk sale publication may be required.
    9. Closing
    Almost finished. Today’s tasks to be completed may include:

    Inventories & Fixed Assets: All need to be accounted for and valued. You may elect to hire professional services to assist with itemizing the parts and vehicles and appraising the fixed assets. This should be scheduled 1-2 weeks before the closing, with final adjustments made on closing day. The cost is borne equally by buyer and seller.

    Employees: Under an asset sale, all employees will be terminated by the seller and rehired by the buyer. Accrued vacation time and other benefits earned may need to be paid out.

    Contracts: Cancel terminable vendor contracts in advance and prepare assumable contracts for buyer. Your Attorney may also assist in terminating your OEM agreements, signing of the bill of sale, paying off debts, securing releases from labor and tax agencies, etc.

    Excluded Assets: The Definitive Agreements will specify any assets or inventories that will not be purchased. These items, personal and excluded, will need to be sold or removed from the dealership premises.

    Closing Statement: Your Attorney and Accountant will assist with the preparation of the closing statement to ensure it is consistent with the Definitive Agreements.

    Wires and Escrow: Buyer will wire funds into escrow, and escrow will disburse funds according to the closing statement.
    10. Post-Closing
    Congratulations! You have sold your dealership and you may finally exhale. However, there are still a few items that require your attention post-closing. These may include satisfying accounts payable, collecting receivables, managing the service and F&I chargebacks, and relocating business records that need to be maintained as per applicable laws.

    Buying a Dealership

    Strategic Buying Program
    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 off-market.

    We solicit specific stores, regions, markets and franchises of your choosing. 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.

    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.

    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. We are here to help you acquire your next dealership on your terms.
    Assemble Your Buying Team
    The acquisition of a franchised dealership can yield a highly desired return on investment, either as a first-time buyer or as an addition to your existing portfolio.

    To prepare for a purchase, begin by assembling your buying team and identifying your buying criteria consistent with your financial capabilities and desired return on investment.

    Your Buying Team should be comprised of a buy-sell attorney, accountant, financial lender, and dealership broker or buy-sell advisor. You may also consider engaging an experienced operator if you are a first-time buyer or intend to be an absentee owner. Your Buying Team will be instrumental in ensuring a successful transaction.

    Develop Your Buying Criteria
    There are many variables that make up a dealership profile. Consider your motivation for a purchase as this may help you finetune your buying criteria.

    Brand Representation: Study the various manufacturers and franchises, understand the brand’s market share and how it performs in a particular market, research the requirements for facility improvements and manufacturer approval.

    Performance Thresholds: To determine the size of a dealership for acquisition, establish your thresholds on items like sales, gross profit, net profit, fixed operations gross profit, number of units sold, new to used ratio, etc. Look for any unusual performance benchmarks that might not be sustainable or replicable.

    Performer or Underperformer: A well-performing dealership with a consistent track record reduces the risk associated with the investment, and therefore, tends to have a higher price tag. If you have the skillset to turn around an underperformer, you can expect a greater return on investment. Consider which is the better approach for your investment.

    Location: Regions, States, or specific markets. Metro, fringe metro or rural. Population, demographics, accessibility, highway visibility, competition, etc.

    Real Property: Most buyers prefer to buy the real property. However, if you are short the funds required for a purchase or if a gap exists between you and the seller for the goodwill portion, the rental income provided to a seller in a lease may offer a path to securing the deal.

    It is important to remain patient during the exploration process. Unlike real estate, there is no Multiple Listing Service of dealerships available for sale. It can take months for the right opportunity to be presented to you, and it can be another 4-6 months until closing.

    Capital & Financing
    Your accountant will help you prepare a budget and a business plan to be provided to your financial lender. The OEMs may source the cash invested. Certain assets and inventories of the business are financeable depending on the requirements of the lender and the OEM. Those assets and inventories will include:

    New Vehicle Inventory: 100% financed through a short-term loan secured by the new vehicle, referred to as a “floorplan”.

    Used Vehicle Inventory: Although some dealers prefer to limit the used vehicle floorplan, financing is available and a bank will typically require a minimum of 25% equity.

    Fixed Assets: Up to 50% financed and collateralized by the assets.

    Real Property: Up to 80% financed and collateralized by the real property.

    Goodwill: Up to 50% financed, although the OEM may have requirements that impact the amount of goodwill that can be financed.

    Working Capital: Partially financeable, depending on your overall financial strength. Working capital requirements will vary for each OEM.

    Staying committed to your budget will increase your likelihood of an approval by the lender and OEMs and will also reduce your risk of becoming undercapitalized.

    Prepare Your Proforma
    Once you have identified an acquisition opportunity, you should prepare a pro forma using realistic projections. Your pro forma will be essential in securing financing and will be required for OEM approval. It will also allow you to make an educated and justifiable offer to purchase the dealership.

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