Most dealer/owners are so busy running the day-to-day operations of their business they don’t think about selling their dealership when it is performing at its best. They may think the only time to sell is when they want to retire or devote significant time to other endeavors. However, it is very difficult to find a better return on investment than an automobile dealership.
Whether you’re looking to turn a large profit or simply eliminate or transfer responsibility, the best time to sell is after addressing some key aspects to fine-tuning your business for sale.
In order to add value in any market, you should address the following items:
- Investigate the transferability of all contracts including leases, suppliers, and sales.
- Make sure all company equipment is in good operating condition.
- Spruce up the physical aspects of the business facility.
- Standardize and document all company processes and procedures.
- Resolve any outstanding litigation and eliminate any liens or liabilities.
- Make sure key employees have employment contracts in place and eliminate low-performing employees.
- Establish a management team that can operate without you.
- Have clean, verifiable financial statements for the past three years.
Take the following actions to improve your cash flow:
- Reduce unnecessary inventory.
- Ensure financial controls are established.
- Renegotiate unfavorable key supplier contracts.
- Reduce adjustments on income statements.
- Make sure to collect outstanding receivables.
Ideally you should plan to sell your auto dealership business 3 to 5 years in advance of putting the property on the market. You need to demonstrate a track record of maximum profits to increase your proceeds.