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What’s one of the first things you think a potential buyer (and his advisers) wants to look at when they’re considering your dealership?
Sure, they look at the lot…at your equipment…at your inventory…your market.
But they will look at your financial statements for strengths and weaknesses.
After all, buyers are always looking for a warning sign that a deal is bad.
Re-cast your statements in a more realistic light (on a go-forward/cash flow basis)…
It makes sense?
Some dealers are a little concerned about the way their financial statements look…they may have a bottom-line that is much greater than what shows on their statement.
For example in the past we’ve had dealers with boats, airplanes, condos, racehorses, farm machinery, a boat captain, a farm, family-member demonstrators, family-member cell phones, unrelated insurance cost, off-statement income, un-necessary employees and additional non-productive expenses.
All that might be ok when you are running your business, but when it comes time to sell it artificially depresses the true picture of your store on a go forward basis.
We had a client with less than $800,000 profit on his statement. After our thorough preparation of a “go forward/cash flow” recast his bottom-line ended up at over $2 million profit.
A key to getting the greatest value for your dealership is working with a firm like ours that has the experience and expertise to understand all the questions to ask that will expose the hidden profitability for a new owner.
Explain the past…sell the future…
Conclusion: Your raw financial statement can send the wrong message to a prospective buyer. Uncovering your hidden profits can make your dealership worth a lot more that you might think. This can also help you speed the deal to a conclusion
Pat McNulty is the founder and president of McNulty Automotive Business Consultants, LLC. In addition to building several successful dealerships as an owner, he has assisted owners and their family members with over 150 dealership transitions. To learn more about how you can intelligently deal with this sensitive issue, contact Pat at 1-800-800-4728.
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