Industry: Franchise Automotive Dealerships
Location: United States
EBITDA: $500K to $2.5M
EBITDA Multiple: Varies depending on brand and geography as well as other factors – 3x to 8x Transaction Amount (Include Business & Real Estate): $2M to $7M+
M&A Advisor: Hal Feder
Summary: Murphy Business M&A Deal Team Podcast – Franchise Automotive / Marine / Powersport / RV / Motorcycle Stores
In this transaction-specific episode of the Murphy Business M&A Deal Team Podcast, we delve into the world of franchise automotive dealership businesses, including marine, powersport, RV, and motorcycle stores. The podcast covers 14 transactions within these categories, mostly involving dealerships, located across the United States.
Our guest expert, Hal Feder, who specializes in franchise automotive dealerships with over three decades of direct industry experience, shares insights into the deal structure and key terms involved in these transactions. Notably, many sellers in this market are nearing retirement, making these deals critical as the automotive industry undergoes significant disruption and transformation, including the evolution toward all-electric vehicle architecture.
The podcast takes listeners through the process of these M&A transactions, starting with preparation, valuation, and goal alignment with the seller. It further delves into material development, marketing planning, prospecting, qualifying, offer development, due diligence, and funding. Notably, the crucial OEM approval process can take 60-90 days, adding complexity to the deals.
Valuation in franchise automotive deals involves multiple factors, with brand and geography playing pivotal roles. The webinar highlights the unique pricing conventions, considering items like FFE, parts inventory, blue sky (goodwill), and real estate. To navigate challenges and risks that arise, the team emphasizes problem-solving and thorough candidate qualification to avoid delays.
Negotiating deals in this market often revolves around blue sky/goodwill, requiring transparency and clear communication. The podcast underlines the importance of ensuring alignment between parties and managing conflicts of interest through direct and transparent communication.
During the integration process, most buyers are experienced dealership professionals, reducing the need for extensive integration. However, the podcast stresses the significance of agreed-upon communications plans to effectively communicate the transaction to employees.
Lessons learned from these M&A transactions are seen as opportunities for growth and continuous improvement. The advice for sellers involved in similar deals is to choose an experienced, trustworthy broker who prioritizes their interests throughout the process.
In closing, the podcast reflects on the resilience of the M&A market despite challenges like supply chain issues, inflation, and geopolitical tensions. The demand for established, cash-flowing businesses with professional teams continues to be robust, presenting opportunities for motivated and qualified buyers.
The Murphy Business M&A Deal Team Podcast provides valuable insights and expertise to navigate the intricacies of M&A transactions in the franchise automotive and related sectors, making it a must-listen for businesses seeking successful deals in this dynamic industry.