Valuation • Financial Turnaround • Fraud Investigations • Strategic Advisory
Buying and Selling Automobile Dealerships
IF IT’S NOT WRITTEN, IT’S NOT IN THE WORLD
WHAT WE DO
We provide the judgment that comes from decades of buying, selling, valuing, restructuring, and advising automobile dealerships. Experience cannot eliminate every risk, but it can identify costly mistakes before they happen.
When I began representing dealers in 1972, many buy-sell agreements were literally written on paper napkins, placemats, or across a table in a coffee shop.
There were no personal computers, no internet, and no books for dealers on the subjects and very little guidance for attorneys representing car dealers. To bring order to the process, I spent nearly ten years researching, organizing, and writing a comprehensive two-volume reference on buying, selling, and representing automobile dealerships, dealer principals and investors.
Many of the forms commonly used in dealership transactions today trace their origins to forms first published in our two-volume reference work in 1990.
THE DETAILS MAKE THE DIFFERENCE
One of the biggest problems I see with sellers to day is that they have no idea what they left on the table. They walk with a million dollars and they are happy. They don’t realize they left $500,000 on the table. The more they make, the happier they are. If they walk with $10 million, they don’t know and don’t care what they left on the table. If they are happy, I guess that’s OK. But a fair deal means they get what they deserve and the buyers pay a fair price for what they get.
Putting us on your team could definitely make the difference between the success and failure of your transaction. Review our resumes, references and past experiences and decide for yourself.
Most dealers do not now the difference between “fair market value” and “fair market value continued use” or “in place fair market value.” Or they don’t think about the “fine points” in transactions.
Some General Motors(GM) dealers buy Mopar parts when doing warranty work. The parts are made by GM dealers and are eligible to be used on warranty repairs of GM vehicles.
When they are selling their store, however, and the describe the returnable parts as ones listed in the factory catalogue, Mopar parts are not in the factory catalogue; they have their own catalogue.
Many dealers do not know the value of an insolvent stores. When a dealer paid $10 million blue-sky for a store that went broke twice within a five-year period, most dealers thought he was crazy. Today the store is thriving and the buyer’s decision has proven wise.
WOULD YOU LIKE TO LOSE A MILLION?
People and businesses with experienced advisors generally make better decisions than those without them. That’s why advisors exist—to help clients avoid costly mistakes and recognize opportunities others miss.
If an investor in a car dealership makes a bad decision, the investor not only does not earn money, but usually loses money. What hurts more: not making a million dollars, or losing a million dollars?
The same is true with buyers. Many don’t know the opportunity they missed by not paying a fair price for a dealership. Ask the buyer who paid $10 million for the bankrupt dealership.
WORDS MATTER
I often tell clients that a single comma can change the meaning of a contract.
Consider these two sentences:
The dealer said the factory is incompetent.
The dealer, said the factory, is incompetent.
The same words. One comma. Two entirely different meanings.
I have attended many dealership closings where a buyer has looked at me and said, “I had no idea the contract said that.”
By then, it was too late. The contract said exactly what it was intended to say—the buyer simply hadn’t understood the legal consequences before signing it.
Every word matters. Every sentence matters. Every comma matters.
One of the cases discussed in law school to emphasize the importance of careful drafting involved the written amount:
“One Hundred and Thirty-Five Thousand.”
The seller believed those words meant $135,000.
Under the legal interpretation applied in that case, the word “and” was treated as the equivalent of a decimal point. The amount was interpreted as $100,000.35—one hundred thousand dollars and thirty-five cents.
Thirty-five thousand dollars disappeared because of the way the amount was written.
That case has stayed with me throughout my career because it illustrates a simple truth: Words matter. Punctuation matters. Details matter.
WE ARE ADVISORS – NOT BROKES
We are not brokers who simply match buyers with sellers. We are advisors who help buyers and sellers know when to hold them, when to fold them, when to walk away—and when to run.
Automotive News, April 16, 1990, “Writing the Book on Buying and Selling Auto Dealerships,” by Arlena Sawyer
Advising Automobile Dealers LLC
We Could Make the Difference
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