There are many elements to review when considering the acquisition of an additional dealership

Do you ever catch yourself looking at dealerships for sale? Having one dealership, or just one in a certain area, is sort of like having one child. You are already going through the motions and adding another does not add 100% to your efforts.

There are synergies to enjoy through acquiring another dealership. It can even be a hedge against a slowdown in a market or a brand. But when an opportunity is presented, there are many things to consider. Let’s look at a few things to ponder when looking at adding a dealership to your portfolio.

Franchise

Is it similar or complementary to your e,'(i.sting brands? Do you have team members that have knowledge and ex­ perience with the brand? What is  the  current and future consumer  demand for the products they produce?  Do  you want to do business with the clients that buy their product? What is their niche… does it match your current business model? If not, is the seller’s management team, assuming they will stay, capable of generating the  ROI you desire? What additional resources do you have that can take the store to the next level? Keep in mind  that when a customer sees the manufacturer’s sign on your building, it instantly  sends a message  to  their brain that  sets the bar for their expectations . Are you ready to exceed it?

Geography

Can key members of your current team travel to the new store, work several hours, and return on the same day? If not, can your current store stay on track with key people out for several days at a time? Successful, multi-point dealers with stores in different regions often create a “platform” dealership or office to service a group of stores in  a given area. Some practical areas to consolida t1 are accounting, HR, marketing and IT. If it is your second store, you should be thinking along these lines. The return to the bottom line can be significant.

Culture

Every store has a culture, good or bad. What is  the  culture of  this store?  Is it  a fast-paced  metro  or a laid-back  ru­  ral store? Maybe it is the  service  department  that shines by retaining  the  customers.  Or it’s been at  the  same loca­ tion for years at Main & Main with strong community involvement. A perfect scenario is when the culture of the prospective store matches  your  current  culture.  However,  if  the  existing  culture works,  be mindful of  changing  it. If it  is broken,  it  must be fLxed.  Perhaps adding resources  to its  deficiencies  and  harnessing its  strengths will allow it to prosper. The market will reward you for making these changes.

Facility

Are there significant deficiencies that must be addressed before the business plan can be fully executed? Some things are easy to solve temporarily, like renting an adjacent lot for storage until minor facility upgrades are com­ pleted. Major construction or relocation that will enhance value can also be a vacuum of time and capital. Are you ready, willing, and able to take on the task?  Some buyers can delay projects by working with the manufacturer on  a plan to build the business before upgrades are made. Work closely with your  advisor  during the negotiating  stage to map out a plan for implementing the necessary changes after closing.

How Does it Feel?

And finally, does it feel rightJ After you’ve  done  the  walk  through,  digested  the  numbers,  and  discussed  it  with your advisory team, how does it feel? This is the 30,000-foot view combining your intuition, emotions and logic.

Your Team

THE BEST PRACTICE when considering adding a dealership location is to have your bench ready. Start today to have a process to recognize, train up, and retain your best talent. If you don’t reward them, someone else will. Provide opportunities for those that are destined to succeed and keep them

It has been said that success happens when preparedness meets opportuni­ ty. Are you ready?

For more information about how the above may affect you and your dealer­ ship business, please feel free to contact David McNulty at da­ vid.mcnulty@mcmcpa.com or Scott Herman at scott.herman@mcmcpa.com.