Automotive News Canada - April 2024 - 13

EXECUTIVE INSIGHTS
SPONSORED CONTENT
EXPERT ADVICE FOR SUCCESSFUL
DEALERSHIP SALES
For many dealers, figuring out whether or not to sell their
dealerships is one of the most important decisions they'll ever
make. What factors should they consider? Is it still a good time
to sell? And what value does an adviser bring to the table?
Here Farid Ahmad, the Founder and Chief Executive Officer
of DSMA - an automotive intelligence and mergers-and-acquisitions
advisory service with more than 1,000 years of combined
industry experience - brings clarity to this complex process.
DSMA has performed more than 1,700 valuations and
completed more than 425 transactions in North America.
Q: How should a dealer prepare a dealership for a sale in
2024 in order to appeal to more buyers and maximize the
value of the dealership?
Farid Ahmad: There are several crucial steps that every seller
must undertake to not only facilitate the sale of their dealership,
but to also sell it for top dollar:
* Ensure all financial statements are up to date and accurate.
Focus on refining the balance sheet to present a clear picture of assets and liabilities.
This entails a thorough review of accounts receivable, payables, contracts in
transit and factory warranties, including the assessment of their age and status.
Farid Ahmad
preparedness to enter the market. Predicting market trends
entails a degree of uncertainty and informed decisions must
be made based on available information. Presently, the United
States market is robust, but could be influenced by the ongoing
election cycle. Yet, the post-election landscape and subsequent
policy shifts may introduce new dynamics. Provided the preliminary
steps outlined earlier have been diligently executed, including
the selection of the right adviser, and your brand is doing well,
it is always a good time to sell, regardless of the temporal context.
Q: If you are a dealer in a rural area, a single-store dealership
or a family-owned dealership with no obvious succession
plan, does it make sense to even wait for a better
buy-sell market, or should you just sell this year?
Ahmad: The decision regarding the optimal time to sell is contingent
upon various personal considerations. Factors such as the
seller's health, age, the tenure of dedicated employees and overall
satisfaction with the business play integral roles in determining
* Clean up the used-vehicle inventory by removing any units that have been in stock
for more than 90 days. Conduct a comprehensive inspection of remaining inventory
to ensure frontline standards are met.
* Facilitate dealer trades to eliminate aged new-vehicle inventory so your remaining
stock reflects current model years.
* Conduct a comprehensive site inspection with a discerning
eye. Attend to any maintenance needs promptly so you can
present the dealership in its best light.
Q: What should a dealer look for in hiring a sales adviser?
Ahmad: I would recommend that dealers seek an advisor with:
* A demonstrated history of successfully navigating dealership
transactions, showcasing expertise and proficiency in
the intricacies of the industry.
* High ethical standards, which ensures integrity and transparency
throughout the sales process.
Our valuations
align closely with
the true value of a
whether it's appropriate to wait for a more favorable buy-sell market. It is essential to recognize
that personal fulfillment and well-being should be prioritized alongside financial
considerations. To date, I have never seen a Brinks truck following a hearse!
Q: Given all the deals that DSMA has closed over the years, in good times and
bad, what are some of the lessons learned or best practices discovered that
might help a dealer who is looking to sell?
Ahmad: During the past 10 years, we have gained valuable insights that can guide
dealers who want to sell their business. These include the
importance of meticulous upfront preparation before bringing
a dealership to market. We recognize the necessity of
qualifying potential buyers to ensure they have their finances
in place. We have learned not to take a listing when the seller
is asking for an unreasonable price that we have confirmed is
far from its market value.
dealership, often
within a margin of two
to three percent.
* A broad and influential network within the automotive industry, which facilitates
access to the best and most buyers.
* Strong evidence of past successes, which indicates the adviser's ability to deliver
favorable outcomes for clients.
* Glowing testimonials from previous clients, which reflect their ability to deliver
exceptional service and results.
* A selling approach that aligns with your preferences and comfort level, which fosters
a collaborative and productive working relationship.
* The expertise to accurately valuate your dealership, which helps ensure a maximum
return.
Q: Let's say a dealer decided to sell in February. Now it's August. What red
flags or warning signals should make that dealer reconsider a sale in 2024?
Ahmad: After all the preliminary steps outlined earlier have been diligently addressed,
the dealer must assess several critical factors to determine the viability of proceeding
with the sale in 2024. These considerations include evaluating the market demand
for their franchise, the effectiveness of their marketing strategies and the potential
impact of seasonal disruptions such as Thanksgiving and Christmas. Failure to secure
a deal by these pivotal dates could make the dealership seem overpriced.
Q: If you're considering a sale today, does it really pay to wait until next year
or even the year after?
Ahmad: The decision to defer a sale until the upcoming years hinges on three pivotal
factors: the state of the economy, the desirability of one's brand and the seller's
Our valuations align closely with the true value of a dealership,
often within a margin of two to three percent. Furthermore, we
have come to appreciate the multifaceted nature of the selling
process, which requires a well-rounded team equipped
with diverse skill sets.
Q: The word " uncertainty " is often used to describe 2024.
How can a dealer get past this uncertainty?
Ahmad: Uncertainty is a great word to describe the current market situation. In the
face of potential interest rate fluctuations throughout the year, selling your dealership
this year may be the best decision.
I would say that one statement has always stood the test of time, regardless of the
market: " If you could have, you would have. " Some sellers want to wait until their
dealership is firing on all eight cylinders because they feel the store has potential. But
some dealers have a hard time grasping that in order to capitalize on the potential of
an underperforming store, it takes risk, financial investments, hard work and technological
advancements that they may not possess.
ABOUT THE PANELIST
Farid Ahmad
Founder and Chief Executive Officer, DSMA
With more than 35 years of global auto industry experience, Ahmad is considered a genuine
industry expert by dealers and OEMs alike, with his finger on the pulse of the automotive
marketplace across North America. To learn more about DSMA, visit www.dsma.com.

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Automotive News Canada - April 2024

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