When it comes to selling their business, many dealers overlook a critical component of the transaction: real estate. With mergers-and-acquisitions activity still lagging behind its pre-pandemic pace, retailers will need to consider all aspects to find the best deal.
On this episode of CBT Now, host Jim Fitzpatrick is joined by Sheldon Sandler, founder of Bel Air Partners. Sandler is a well-known industry leader with years of experience in automotive retailing and manufacturer relations. He has also overseen numerous M&A transactions and helped dealers find the best buyers for their enterprises. Now, he discusses the importance of dealership real estate and how business owners can use their land to attract the best buyers.
Key Takeaways
1. Dealers often forget the importance of their real estate when entering the mergers and acquisitions market. By leasing the land rather than selling it as part of a buyout, they can continue to make an income. However, buyers often prefer to have site control and will not consider a deal if the land is not included.
2. Dealers must take a close look at the details when gauging the value of their real estate. Manufacturers may not approve of the transfer if the property is poorly kept. When leasing a property, a buyer may also expect the owner to fix issues such as air conditioning failures or roof leaks.
3. When selling their business, dealers should always look for the best buyer: the one who will take the best care of their business and who will pay the most. By declining to sell their real estate, retailers may potentially cut themselves off from finding their best buyer.
4. Sellers and buyers often distrust each other. If dealers fail to build trust with prospective buyers, they may lose out on a major deal. One way to build trust is to ensure the business’ staff and management team are in good shape.
5. While the COVID pandemic caused mergers and acquisitions to stall, there is still demand for good dealerships with quality real estate. Buy-sell activity is likely to continue its recovery well into 2024.
