What a Buyer Checks First
- The dealer agreement and whether the manufacturer must approve the buyer
- New and used inventory, its age and what is financed on a floor plan
- Parts and service income as a share of total gross profit
- Territory, key customers and how many are repeat buyers
- Who owns the land and buildings and what rent a buyer would pay
The Manufacturer Has a Say
Most dealerships operate under an agreement with the manufacturer, and a sale usually needs that company's approval. Buyers want to see the agreement, any sales targets and the territory it covers before they spend money on lawyers.
A dealer without an approved buyer in hand has little to sell, so talk to the manufacturer early.
Inventory Is Priced Twice
New machines are counted at cost, but used equipment is a judgment call. Buyers check the age and hours on every unit, and slow movers get written down. A floor plan lender will also want to be paid out or assumed at closing.
Parts and Service Pay the Bills
Machine sales rise and fall with crop prices and interest rates. Parts and service income is steadier, and buyers pay more for a business where it carries a large share of profit. Show the split by year.
Skilled technicians are scarce. Buyers ask who they are, how long they have worked there and whether any of them might leave.
The Land and Buildings
Most dealerships sit on a large lot with shop space. If you own it, you can sell it with the business, keep it and rent it to the buyer, or sell it separately. Each path has a different tax result, so plan it with your CPA.
Deals are usually asset sales. Read about an asset sale or stock sale, and note that the buyer needs a sales tax permit of their own.
Getting Ready
Walk the lot with an appraiser, reconcile the floor plan statements and gather three years of financials split by department. Dealers who arrive with clean numbers hold up better when the manufacturer and lender start asking questions.
Ready for a range? Ask for a confidential estimate.