When a dealership is performing at its peak, it may not occur to the dealer or owner that this may be the best time to sell the business.

Waiting for retirement or times when you want to devote time to other endeavors means missing out on the opportunity to get the best profit, since a well-performing dealership is an excellent return on investment.

With these items addressed and fine tuned, you can transfer or eliminate responsibility and turn a large profit by then selling your business.

Adding Market Value

Address these aspects to enrich the market value of your dealership:

  • Spruce up and optimize the physical aspects of the facilities
  • Eliminate liabilities and liens and resolve any applicable litigations
  • Establish contracts for key employees and eliminate low-performance employees
  • Onboard or train a management team that can handle operation without you
  • Gather three years of verifiable financial statements
  • Bring all company equipment up to good operating condition standards
  • Establish standardized documentation of company procedures and processes
  • Ensure the ability to transfer existing contracts, leases, suppliers, and sales

Cash Flow Improvement

In addition to market value, you can increase the profitability of a sale by improving cash flow with the following steps:

  • Collect outstanding receivables
  • Reduce unnecessary inventory
  • Establish financial controls
  • Renegotiate non-optimal contracts for key suppliers
  • Address adjustments on income statements

The ideal situation is to begin planning the sale of your auto dealership 3 to 5 years in advance before putting the business on the market. Demonstrating a track record of maximum profits will increase your proceeds from the sale of your auto dealership.

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Since 1990 Don Brown has been providing intermediary services to automobile dealers. He has worked for Ford Motor Company and Chrysler Corporation (FCA) at the District and Zone levels. He has experience in automotive sales and sales management and spent 14 years as a dealer principal for Ford Motor Company and General Motors brands.