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Old 01-13-2016, 08:42 PM   #1
johnpico
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Default Is now the right time to buy a dealership?

For the last several months I have been bombarded with the question: "Is now the right time to buy a dealership." Seven years ago I wrote an article on the right time to buy a dealership and the answer remains the same. If you are interested, below is a link to the article.

http://ezinearticles.com/?Is-Now-the...ip?&id=3299796
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Old 01-14-2016, 09:43 AM   #2
XDCX
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John,

Thanks for the link, that was an excellent article.

I'll admit that I've historically paid way too much attention to "multiples" when evaluating a dealership's Blue Sky value and like a lot of your clients I tend to believe that there are "good" and "bad" times to buy dealerships.

I always enjoy learning from other people and like your other posts on the forum your words are very informative - especially when they counter some of my long held beliefs.

Concerning your clients, I can see why you're getting more inquiries lately about dealership valuation. I don't know if it's the decline in the stock market or the recent comments made by AutoNation's Mike Jackson but it does seem that some of the enthusiasm about the retail auto sector has lessened.
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Old 01-14-2016, 09:53 AM   #3
XDCX
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Here's an excerpt I really enjoyed:
At one time there was a dealer group in Colorado that presented an offer for the existing dealer to pay them (the buyer) $2,000,000 for them to take-over the stores. The offer was based upon projections of what the stores would lose while buyer tried to turn them around. The seller refused and ended-up losing several million more before the stores closed. The dealerships properties were eventually sold to a church.
I had to read that paragraph twice before I followed your point and then concluded that I would probably have done the same thing that the seller did and reject the deal.
In your example the seller ended up losing several million dollars because he/she passed on a deal that would have allowed them to sell the business and cut their losses.
.
It's a great example of why a ROI analysis is the best way to evaluate a buy/sell transaction - as opposed to letting emotion or other variables cloud the true value of business.
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