By Alysha Webb, Editor and Publisher
What were the multiples on that deal? Here I am referring to that number that is used to estimate the value of a dealership taking into account various intangible assets such as goodwill. As I have learned from talking with new buyers of a dealership, often they don’t know the answer to that question. Of course they probably do have some idea in their head what all those intangibles are worth. But as my interview in this issue with John Jomehri, new owner of four franchises in Barstow, Calif., shows, that isn’t uppermost on their minds.
I met John when he was the general manager of Metro Honda and Metro Acura in the Los Angeles suburb of Montclair. He has filled a couple of roles since then, including being part owner of a dealership in Los Angeles. We reconnected when he bought the Barstow franchises.
Jomehri is clearly delighted to own the Toyota, Nissan, Ford, and Chrysler Dodge Jeep Ram stores. He is also delighted with the people and the city of Barstow. When Jomehri went in to discuss permitting, “while we were talking they made all the permits I needed,” he said.
Jomehri didn’t know the multiples on the various franchises since the deal was done as a package. But whatever they were, he would likely have discounted them. As with most dealers, John figures he can ramp up the stores’ sales quickly.
I love that optimism, which is a necessary trait if one owns a dealership, I suspect. But as attorney Ron Coleman points out in this week’s issue, don’t let leave your skepticism at the door when you negotiate a deal, even if it is with a long-time acquaintance.
Coleman works on many small deals and he cautions to always do thorough due diligence regardless of the deal’s size. And even though it might seem to save money not to use a broker, that might also leave money on the table, he says. (Jomehri did use a broker and did most of his own due diligence.)
Coleman also offers some excellent advice to sellers: Tidy up your dealership before showing it to potential buyers. Seems like common sense but apparently it doesn’t occur to everyone.
Enjoy!
