Most dealers who have tried to sell their business can tell you how easy it is for something to go wrong during the transaction process.
From unclear letters of intent to disconcerting liabilities, there are a host of possible stumbling blocks that could delay or doom any deal.
Peter Heasty, president of CBV Automotive Dealership Acquisitions Inc., estimates dealers working on their own only have a 50/50 chance of closing a transaction.
Heasty leads a new specialty practice at Collins Barrow Vaughan that facilitates the complex, high-stakes and even emotionally charged process of buying and selling dealerships across Canada.
Collins Barrow Vaughan and CBV Automotive Dealership Acquisitions are part of the Collins Barrow National network, mid-market leaders in audit, tax and advisory solutions. It is Canada’s eighth largest public accounting organization by revenue.
“Often dealerships don’t have access to a sophisticated and comprehensive service that provides them with a complete analysis of their finances and relevant context, helps pitch the deal, ensures that it closes and mediates issues that arise along the way,” he says.
Heasty is a self-proclaimed “used-car salesman first, professional accountant second,” who grew up on the showroom floor of his father’s dealership. In his 30 years managing deals and projects for auto retailers, (as well as CFO and advisory positions with multi-franchise dealer groups), he says he has seen it all.
“With dealership acquisitions, it used to be if the vendor won, the seller lost, or vice versa,” says Silvano Zamparo, another partner at the firm. “But if you know what you’re doing, you can get a result that both sides are happy with, and that’s absolutely critical to consummating the deal.”
Heasty estimates dealers leave potential profit on the table in 80 per cent of deals. With that in mind, he prepares a forecast that outlines the difference between a dealer’s profit and what they really should earn.
“It gives the purchaser comfort that he’s paying for something that will actually do even better,” says Zamparo, referencing a recent deal in which Heasty swiftly identified underperforming areas.
“It’s about identifying value potential within the transaction, and that is something that is not usually done.”
Another strategy the firm says it employs is to avoid advertising dealerships for sale. Instead it discreetly handpicks candidates from a well-researched inventory of buyers.
By focusing exclusively on dealership services, the practice also moves through deals faster and with more efficiency; Zamparo notes deals can lag without a financial advisor dedicated specifically to this service.
Heasty likes to think of his role of deal facilitator as a combination of translator (decoding and bringing perspective to accounting, legal and auto language) and conductor, mediating the transaction process and steering it to a close.
“It’s this role that really keeps the deal rolling,” says Zamparo, “otherwise gaps start to develop in the transaction and the thing comes to a grinding halt.”
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