The dealership M&A (mergers and acquisitions) market can be confusing to navigate. Knowing the technical aspects of valuations and buy-sell transactions is crucial to obtaining a good deal for your business.
On this episode of Driving Solutions, host Jim Fitzpatrick is joined by Todd Berko, co-managing partner at Bel Air Partners. The company is a buy-sell advisory with more than 25 years of experience in the dealership M&A space and a treasure trove of knowledge on what buyers look for when negotiating a deal. Now, Berko shares his insights into the technical aspects of valuations and his recommendations for dealers considering an exit from the car business.
1. Bel Air Partners is a full-solutions provider for dealers but specializes in the more technical buy-sell transactions, which Berko attributes to the breadth and depth of the company’s expertise in dealership M&A. The company also offers some litigation services, typically representing the dealer in conflicts involving a manufacturer.
2. Berko notes that the dealership M&A process is a life-cycle event, meaning store owners should only work with someone they know and trust. Whatever their reason for selling, knowing their clients personally helps Bel Air Partners deliver the best advice possible when walking dealers through their buy-sell transaction.
3. Due diligence is an essential component of dealership M&A transactions. While some buy-sell firms conduct valuations based solely on business statements, Berko notes that it is crucial to avoid surprises during negotiations.
4. Bel Air Partners conducts its valuation process by first examining what the buyer is searching for. Berko explains that the Blue Sky Multiple of a dealership must meet the buyer’s criteria for a successful business to result in a good deal for the seller.
5. Even if dealers are not considering retirement in the near future, Berko urges them to still go through the valuation process. Not only can life circumstances change without warning, but valuations can help store owners make wise decisions for their businesses. Navigating the dealership M&A market is also easier when retailers already know the value of their brand.
"The one thing that off-roads a deal more than anything else is surprises and a lack of trust between parties." — Todd Berko