Timing is Everything! |
Nancy represents franchised automobile dealers by orchestrating dealership sales and closures for those wishing to divest, facilitating targeted acquisitions on behalf of buyers and determining the true market value of their business. They have been successfully serving auto dealers for over 25 years, with great professionalism. |
There will always be both buyers and sellers of auto dealerships. But the real question: ‘How much will I obtain when I am ready to sell my particular franchise?’ is a reminder that the most critical factor in determining when you should sell is always Timing. |
Timing in our industry determines whether you will get out with more or less for two very important reasons. First, the cyclical nature of our industry and the economy impacts the amount you receive for the intangible value of your dealership. And second, your financial performance is critical - but not for the reasons you may think. Dealership profitability does not have as much to do with what a qualified and astute purchaser will pay, but has everything to do with your biggest asset – cash flow. How much you are taking out or infusing into your business is really what determines how much you end up with in your pocket at the finish of your term of ownership. The information on dealership values represented below is based on a portfolio of 200 dealership transactions over two decades from 1990 through 2011. Approximately 80% of the dealerships held 2nd tier franchises – the ones most of you own. |
![]() |
1990 - 2011 |
• The real value of your dealership is the sum of your cumulative profit or loss more than in the price you obtain at the end of the road. • The idea that real estate ownership (though not depicted in the chart) is part of your ultimate return on investment is only sometimes true. • And, most importantly, though also undetectable herein, is the fact that your own profit or loss has very little to do with what a savvy, optimistic and financially strong purchaser will pay for your dealership. |
The answer is potential. It’s the future estimated value of your franchise which is a product of your market area, the number of dealerships sharing your franchise pie and the quality of your location, facility and property size. It’s really the same as buying a top dividend paying stock. Buy with your eye to potential growth and sell just before you get there yourself. |