By Alysha Webb, Editor and Publisher
Light vehicle sales were up an annual 5.4 percent in August according to the National Automobile Dealers Association. Net profits before tax at dealerships in June, the most recent month available, were up 5.8 percent. Sales are expected to remain strong for at least the remainder of this year. And with a slimmed-down dealer body dealership profits will likely remain strong as well.
Those kind of numbers attract investment from outside the traditional dealership world. Private equity, family funds, and foundations are just some of the non-traditional players in today’s buy sell milieu. They bring their own set of expectations and issues to a transaction. Crowe Horwath CPA Rick Kotzen writes about how those expectations and issues impact the deal-making process in this week’s report. Non-traditional investors aren’t a new phenomenon, he reminds us. The publics fell into that category not so long ago.
As he notes, the new breed of investors often doesn’t understand the complexity of the dealership business. While Kotzen is talking about the macro level, the dealership business is also very complex at the micro level. That means there are lots of moving parts that must be dealt with during a buy sell. An area that many may fail to consider is their dealer management system contract. In her piece, computer consultant Sandi Jerome walks us through some of the potential pitfalls a DMS contract can present and suggests a solution.
