Five exit options for auto dealership owners.
When selling or transitioning your dealership business, choosing the right exit strategy is crucial. Click on the options below to learn more about potential benefits and risks, and how each one can help you achieve liquidity or retain control.
Family
succession
Debt/equity
recapitalization
Management/
employee buyout
Private equity
Strategic sale
CONTROL
LIQUIDITY
Risks
With continued consolidation, buyers are more particular on brand, location, etc.
Potential for conflict between the buyer and employees, the OEM, or customers.
Business and culture changes for employees, the OEM, and customers.
No further involvement or control over the dealership.
Benefits
- Receiving value from the dealership more quickly compared to other options.
- Potential for wealth diversification. Retaining real estate could provide ongoing income.
External buyers may bring opportunities for growth, new ideas and expertise, scalability, and vertical/horizontal integration and synergies.
Selling the dealership to a strategic buyer, such as a competitor or consolidator.
Return to options
Next steps
Risks
Potential for conflict between the buyer and employees, the OEM, or customers.
Less business continuity in terms of the management team.
Risk to the dealership’s brand and goodwill.
Little or no further involvement or control over the dealership.
Benefits
- Potential for wealth diversification.
- Receiving value from the dealership more quickly, as compared to other options.
Vendor financing is likely not required.
Selling the dealership to a financial buyer.
Return to options
Next steps
Risks
Loss of control over business decisions.
Prolonged exit process and timeline.
Buyers often need vendor financing loans. Owner may assume risk.
Benefits
- Potential for a more seamless ownership and management transition.
- Business continuity for employees, the OEM, and customers.
- Opportunity for continued participation in dealership growth and leadership.
Selling all or part of the dealership to internal stakeholders.
Management/
employee buyout
Return to options
Next steps
Risks
Prepayment of taxes may be required.
Fluctuating interest rates could affect the cost of borrowing.
Increased oversight.
Benefits
- Potential for wealth diversification.
- Risk mitigation and management.
- Unlocks your dealership’s value and utilizes business assets.
Leveraging the dealership balance sheet or real estate to extract value in the short term.
Debt/equity
recapitalization
Return to options
Next steps
Risks
Limited liquidity; limited wealth diversification.
Successors may not be available, suitable, or prepared.
Lack of external knowledge gained through a strategic sale.
The business may need to support multiple families.
Benefits
- Maintaining a legacy for future generations.
- Trust in your successors.
- Business and culture continuity for employees, the OEM, and customers.
Transitioning the dealership business to the next generation.
Family succession
Return to options
Next steps
Begin the exit planning process now to avoid limiting your options later.
A professional advisor like BDO can help you develop a strategy that fits your circumstances and your goals.
What are the next steps?
Return to options
Next steps
Return to options
Five exit options for auto dealership owners.
When selling or transitioning your dealership business, choosing the right exit strategy is crucial. Click on the options below to learn more about potential benefits and risks, and how each one can help you achieve liquidity or retain control.
Strategic sale
Private equity
Management/
employee buyout
Debt/equity
recapitalization
Family
succession
LIQUIDITY
CONTROL
Selling the dealership to a strategic buyer, such as a competitor or consolidator.
Benefits
- Receiving value from the dealership more quickly compared to other options.
- Potential for wealth diversification. Retaining real estate could provide ongoing income.
External buyers may bring opportunities for growth, new ideas and expertise, scalability, and vertical/horizontal integration and synergies.
Risks
With continued consolidation, buyers are more particular on brand, location, etc.
Potential for conflict between the buyer and employees, the OEM, or customers.
Business and culture changes for employees, the OEM, and customers.
No further involvement or control over the dealership.
Selling the dealership to a financial buyer.
Benefits
- Potential for wealth diversification.
- Receiving value from the dealership more quickly, as compared to other options.
Vendor financing is likely not required.
Risks
Potential for conflict between the buyer and employees, the OEM, or customers.
Less business continuity in terms of the management team.
Risk to the dealership’s brand and goodwill.
Little or no further involvement or control over the dealership.
Management/
employee buyout
Selling all or part of the dealership to internal stakeholders.
Benefits
- Potential for a more seamless ownership and management transition.
- Business continuity for employees, the OEM, and customers.
- Opportunity for continued participation in dealership growth and leadership.
Risks
Loss of control over business decisions.
Prolonged exit process and timeline.
Buyers often need vendor financing loans. Owner may assume risk.
Debt/equity
recapitalization
Leveraging the dealership balance sheet or real estate to extract value in the short term.
Benefits
- Potential for wealth diversification.
- Risk mitigation and management.
- Unlocks your dealership’s value and utilizes business assets.
Risks
Prepayment of taxes may be required.
Fluctuating interest rates could affect the cost of borrowing.
Increased oversight.
Family succession
Transitioning the dealership business to the next generation.
Benefits
- Maintaining a legacy for future generations.
- Trust in your successors.
- Business and culture continuity for employees, the OEM, and customers.
Risks
Limited liquidity; limited wealth diversification.
Successors may not be available, suitable, or prepared.
Lack of external knowledge gained through a strategic sale.
The business may need to support multiple families.
What are the next steps?
Begin the exit planning process now to avoid limiting your options later. A professional advisor like BDO can help you develop a strategy that fits your circumstances and your goals.