Is this the right time to buy a car dealer?

In 2010, there were dealers (domestic and imports), which left more than half a million dollars a month, but most experts said that 2010 was not a good time to buy a dealer.

Remember "If you wait for perfect conditions, you will do anything." Ecclesiastes 11: 5. This is not the "conditions" that count. It is your "analysis". The truth is that most car dealerships that closed in 2010 were purchased or create during the so-called experts now describe as the "good times." The time when the owners and experts regretted "good times" to buy and build.

Example: In 2010, the News ran a front page story about a boy who has been the Toyota dealership building on the highway, and on the other side of the Oakland Coliseum - store of $ 40 million, with a five-story room of the exhibition of the four-storey glass. Dealer experts have declared "... has a broader relationship between the real estate and vehicles that may find naturally traders see."

February 28, 2010 at the Oakland Tribune reported: "New Toyota Sale in Auckland farm." In this article, the director of customer relationship waiver lamented: "I'm a little in shock because we thought we had such a bright future and opportunism here, however, leaving only an empty taste ..."

When analyzing the situation, the concessionaire should fail.

For many reasons, not the least of shop rent factor, the success of the franchise was inconsistent with the laws of nature. Analysis of this situation, however, is left for another article. For this article, I learned a lesson is this: Even if the factory agrees to the deal, the financial and business publications and lenders clapping, this information does not guarantee a successful trader. He said that there are many buyers who still believe these terms mean success.

With the outbreak of the trial today that the factories and the banks do not give business advice because if a dealer failed, it is the factories and lenders who try them. Therefore, we must rely on ourselves and advisers who are not afraid to contradict the boss.

As an aside, do not connect with the usual "deal-breakers" Some advisers are naysayers permanently because councils can not be tried to tell the client not to make a deal. Keep up only when a customer enters a deal gone wrong, because it is not the fault of the customers. It is the bank, factory, accountant, lawyer, business consultant (anyone other than the customer) is to blame.

The bottom line is that there are two basic factors in buying a car dealership that will help ensure long-term success: (1) how it was purchased. And (2) how to manage them.

Each worker has a history, but these are the two keys. How is the purchase of a dealer and how it is managed will determine the long-term success or failure. We say "long-term" because the car dealers provide cash flow enough that some offers may take five years to comply.

Buy a car dealer

What is the correct way to buy a car dealership in bad economic times?

In "good times", and buyers pay premiums for traders, on the basis of brand names and beautiful buildings, beautiful places, and so on. It is, in good times or bad, should actually assess dealers in the same way: by how much the buyer expect to win after purchase. In other words, the expected return on investment (ROI) - and not a brand or a building or site.

Determine what can happen on the store after purchase includes more than mathematics. Regardless of the number of times that have been proven to be "an earnings multiple of the theory of" false, members and partners of Commerce is still perpetuating the myth that buying a car dealer could be as effortless.

A natural result of the repayment method, the purchase price will fluctuate because we tend to expect to do more during the times are "good" against "bad". Therefore, when one says that the sky is blue or goodwill values ​​down, their statement has to do with the "value" franchise something. In addition, there is no information in the statement above to help you determine a reasonable value to pay for the dealer. The only evidence of the basic rules. Instruct staff good lines, but bad masters.

If the dealer goes under and takes a potential buyer of the building keys and said, "It's you, I just want to know." This law is not about franchise value. Questions should be buyer to ask the following: (a) "What is it going to cost me to open the doors," and (b) "What do I think I will win after the own shop?" In other words: "What is my expected return on investment?"

At one time there was a group of traders in the state of Colorado, which made an offer to the current dealer for them (the buyer) to pay $ 3 million for them to take over the stores. The presentation was based on expectations of what stores will lose any buyer tried to turn. The seller refused and ended up losing several million before the shops close. Dealers sold properties in the end to the church.

List good reference for the evaluation and car dealerships can be found in tax income interest 60-61 decision issued by the Internal Revenue Service in 1959. In spite of the decision (60-61) to describe the general approach and review the methods and factors to be taken into account when assessing shares capital shares in private companies for the purposes of inheritance tax and gift tax, the methods described apply to the assessment of the sale of cars and the promotion of a blue sky in the sale of assets by simply backing up the amount of inventory valuation due to goodwill / blue sky.

Five largest car dealers Buyers brand errors:

1. Think about that when you check the gains accomplished a major task. The fact is, that the seller may or may not matter. It must be applied There are a huge number of details and formulas to determine that the new owner can net. What PNUR factor rental store can? These numbers correlate with the percentage of the needs of the grave?

2. exaggeration car sales forecasts. The first question is: "What is the owner of realistic detail new" We have also seen many of the agents who have gone under because the buyer could not accurately predict sales potential of factories and banks? In more than one occasion, we saw the approval of the concessions where potential buyers expected sales that exceeded volume on historical selling area the size of unit commanders.

3. buyers believe the famous names alone can turn around or dealers to sell cars. We can name the most successful, and agents of old cars that are famous, that successful cars that are famous traders. We have a picture that represents a famous athlete to get business award from the President of the United States. He went to the White House, and received in the year before the closure of the factory warehouses. Either he did not foresee one, and one cares.

4. thinking that buying a stock at a low level or zero coefficient of profitability means that they got a good deal. The biggest misunderstanding of the situation is when the new factory price point. Most people think that they have something for nothing. They actually do not. Those who are successful, however, are usually successful because of the time and place - and not because of the dealer.

The truth is that it takes about a year to build a new point of service, but the trader must make the store as if they were already working on eight cylinders. In many cases, it has suffered from the loss of a new point of each month, even if ever, eventually becomes a successful store. These losses are "blue sky." In other cases, it is the second owner who made the go, in some cases, such as Englewood store mentioned above, disappears points.

Buyer savvy realize value for the purchase of dealer has his number in the phone book, and a base of loyal and regular customer service. The main value is that it is the day after and sold in the shop, there are people lining up for the service, people buy spare parts and customers back to the store. This is the reward (blue) to the owner even if the store is losing money.

5. thought there was a "magic" formula that success will be stored. The only formula that works in most cases, is a mix of work and knowledge of the automotive retail industry. Every word is a key word "retail" and "cars". Knowledge of another business is not enough.

Final rookies advice. When the change in the retail automotive business done quickly. Made gum because people make mistakes. We still have to meet someone who has not used one, despite the fact that in today's world can replace the word "gum" with the "backspace" or "delete. When you made a mistake, the trick is the analysis and decision-making and to act quickly. Do not hesitate to correct errors and bad decisions.

This was the advice around for thousands of years, both in the parables we learn as a child (such as a "stitch in time saves nine" and "which reportedly lost", and so on), and Ecclesiastes 12:12, "But my son, be warned - there are not the end of opinions ready to express their studies can continue indefinitely and become very stressful. "

In short, do not hesitate to buy a car dealership in a bad economy, just buy it properly. Read the articles mentioned above and act on them.

"It must be purchased dealer for one reason and one reason only - to make money should not be bought because it is close to home, because the buyer likes the election, because the partner wants to offer job opportunities to a parent or because the attractive building. Bought the dealer to make money and make money, and should be" bought true. "practical guide to buying and selling of cars and national legal traders Publishing Co. (1989) on page 2-4.

He wrote this twenty years ago. This was true, it is true today.

He served John Picot as "debtor adviser court appointed" in the case of bankruptcy, "appointed mediator court" in litigation cars, "the court verdict eye / resident" in conflicts partnership, "the court adviser approved receive" in the event of kiting check- as "mediator Court Supreme "in the dealer / lender litigation and has been recognized as an expert witness in the levels of both the state and the federal government. And consulted on inverted positions of more than $ 50 million, the position of trust more than $ 4 million and an overdraft $ 30 million. Since 1972, Mr. Picco has completed more than 1,000 car dealership operations, in excess of $ billion of common values.

Josh Pico holds a bachelor's degree from Johns Hopkins University, where he maintained a 3.1 grade point average while playing four years of NCAA Division I team in the National Lacrosse League. He was captain of the lacrosse champion Lawrenceville School to the state, New Jersey. Mr. Picco began working with car dealers in 2006, an adviser to the US auto advisers, Inc., where he studied, analyzed and written prospectus for the sale and purchase of dealers and participated in a number of end of the work include both foreign and local dealers.

Estimates and assessments and now, a consultant with auto dealerships Advisor LLC, in addition to assisting in mergers and acquisitions of dealerships operations, Mr. Pico has studied and analyzed, financial and demographic data on Honda BMW products, Mercedes-Benz, Volvo, Toyota, Subaru, Chevrolet, Ford, Dodge, Chrysler, Jeep, Pontiac, Buick, GMC and Cadillac dealerships. It provides for the future in-law.

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