By Eric Schmitz, KPA
Buy-sell activities are complicated and difficult processes to navigate, whether you plan to sell in the immediate future or years down the road. No matter what your timeline, the most important thing to keep in mind is to build and run a dealership that someone wants to buy rather than one you want to sell.
If you want to sell your dealership focus on strong performance not just on sales. The condition of the property from an environmental standpoint can have a significant impact on its valuation.
There are several things you must do to build a company that buyers are interested in:
- Adhere to environmental compliance best practices. This includes:
- Conducting periodic environmental audits – Ongoing documentation that your facility is clean and has no hidden environmental risks is a number one priority. Periodic inspection records and photographs of any environmental concerns as they are identified and remediated go a long way to explaining any events to a prospective buyer.
- Completing Environmental Protection Agency (EPA) filing, licensing and permitting requirements – The EPA develops local, regional and national priorities for non-compliance, so you must implement written plans and complete necessary filing and permitting to ensure compliance. You want to make sure you stay out of the EPA’s non-compliance database as this is a sure red flag for a prospective buyer.
- Ensuring air quality – If your facility has permitted sources (like most fuel pumps and paint booths), make sure to perform day-to-day air emissions tracking and complete necessary permitting to ensure overall site compliance.
- Pollution prevention and waste reduction – Proper documentation of hazardous waste disposal is key and demonstrates that you follow the rules. Inadequate documentation makes a buyer wonder where your waste has gone.
- Tank management – The EPA has established guidelines for existing tank installations. Your dealership must have a specific release response plan that employees are trained on, and you must adhere to permitting and reporting requirements.
- Preparing a Spill Prevention Control and Countermeasure (SPCC) plan – The EPA requires all facilities with the capacity to store more than 1,320 gallons of petroleum products to prepare and implement a SPCC plan. To stay in compliance, you must complete regular inspections, maintain records, train employees on mandated use, management, and storage of oil, provide program certification, and prove completion of required EPA documentation.
- Employee Environmental Training – Training should include fire prevention, emergency response, hazardous waste management, SPCC plans, storm water pollution prevention and tank management.
- Inspection Response – If you are inspected by a regulatory body, respond in writing with sufficient evidence to close the case immediately. Local inspections are often elevated to a state or national level if not remediated, and these state and federal records appear more daunting to a prospective buyer.
- Conduct an Environmental Site Assessment at the time of any transfer of property ownership or facility operator change. Assessments are typically broken into three phases:
- Phase I Environmental Site Assessments involve an above-ground investigation of the property and are limited to current and historical record reviews, interviews of relevant parties and physical observations. If no red flags are found the Assessment ends here.
- Phase II Environmental Site Assessments involve subsurface investigation, possibly including the drilling of core samples and well monitoring. If no red flags are found the Assessment ends here.
- Phase III Environmental Site Assessments include the cleanup of any found environmental contamination.
Some cities and counties have specific procedures to follow when closing or transferring a dealership to a new owner. To create maximum protection for yourself, it is in your best interest to document the condition of your property at the time of sale. To thoroughly assess your property, document the following:
- A formal application, written closure plan and fee submittal.
- A schedule indicating proposed onsite activities.
- A description of tanks, containers and other vessels being emptied or removed.
- Procedures to be used to clean pavement and other contaminated surfaces.
- A post-closure report that includes supporting waste disposition documentation.
Preparing your dealership for a sale can be a daunting task. However, if you implement environmental compliance best practices throughout your ownership, your dealership will be more attractive to buyers. Laws may vary per city and county, so check your local jurisdiction prior to selling to confirm that you are in-line with any other formal closure processes that may exist.
Eric Schmitz is Vice President of Product and Business Development at KPA, where he is responsible for the company’s Environmental, Health and Safety products and services. He can be reached at 925-200-5079 and eschmitz@kpaonline.com.
KPA is a provider of Environmental Health and Safety (EHS) and Human Resources (HR) Management software and consulting services to automotive, truck and equipment dealerships, and service companies.
