After advising on hundreds of dealership transactions, we’ve seen the same mistakes surface again and again. Here are the seven that cost sellers the most.
1. Going to Market Before You’re Ready
Buyers do extensive due diligence. If your financials are inconsistent, your facility has outstanding OEM requirements, or your key employees are unprepared, deals die in due diligence. Preparation takes 3–6 months. Start early.
2. Setting an Unrealistic Price
Sellers who anchor on a number they “heard” or emotionally need will sit on the market. A proper valuation, based on real comparable transactions, sets the right expectation — and gives you credibility with buyers.
3. Telling Staff Too Early
Employee uncertainty kills productivity, customer service, and retention. Experienced advisors manage confidentiality tightly. The right buyers never need to know who you are until an NDA is signed.
4. Negotiating with the First Buyer
Your leverage is maximized when multiple qualified buyers are competing. Going exclusive with the first offer you receive almost always leaves money on the table.
5. Underestimating the OEM Process
Franchise approval can take 90–180 days and has rejected deals that looked certain. Your advisor needs to understand the OEM process for your specific franchise — and should be managing it proactively.
6. Not Understanding Your Real Estate Value
Real estate can represent 40–60% of total transaction value. Dealers who don’t have a current real estate appraisal, or who haven’t considered their lease structure, are leaving significant value unmeasured.
7. Using a Generalist Broker
Automotive dealership transactions are unlike any other business sale. OEM approvals, franchise agreements, floorplan financing, and warranty liabilities require specialized expertise. Generalist brokers consistently undervalue these assets and underestimate the complexity.