Due Diligence

Buying a dealership takes more than just money, it takes the belief that a dealership is worth what you are paying for it. Without an objective due diligence, as a buyer, you are just taking the word of the seller, broker, manufacturer representative, or even your own employees, and all of these can often be unreliable sources. Here’s why an objective due diligence is important:

  • The selling dealer’s primary motivation is to obtain as much money for the dealership as possible. The dealership will be presented in a way to make it as appealing as possible to a buyer.  This sometimes includes making it seem that the dealership could not be operated any worse than it currently is and only the upsides are showcased.
  • The broker’s primary motivation is to close transactions, since this is how they make their living. Whether a deal is right for the buyer can often be a peripheral consideration for a broker.  Brokers are under extreme pressure from sellers and other brokers in the market to close transactions.
  • The manufacturer representative’s primary motivation is to have a dealer who can move as much new vehicle product as possible. New dealers bring fresh capital and energy that drives new vehicle sales. However, it takes more than just selling new cars to run a profitable dealership.
  • Your employees’ primary motivation is often to keep you happy as an owner and to preserve their jobs. Let’s face it, many dealers are surrounded by “Yes Men & Women”, individuals who will hesitate to question the actions of the dealer, particularly on the rationale on whether to acquire a certain store and the price being paid.

Our role at Axiom Advisors is to provide the dealers (buyers) with an objective and uncompromising view on the transaction being considered; both the good and the bad. Our collective operational and financial backgrounds provide dealers insight into acquisition targets that traditional accountants fail to provide. Traditional accountants are by nature very conservative, and typically fail to recognize the upside on potential transactions. Additionally most accountants lack hands-on retail automotive operational knowledge, which limits their effectiveness and efficiency in analyzing retail automotive transactions.

All of Axiom’s professionals having worked in dealerships, and are all accountants by trade, creates a unique hybrid of skills, experience, and talent that is unrivaled by any other firm in the dealership industry.

Our team has worked on transactions of all sizes and complexities, many of which exceed over $100 million in total assets. In past transactions, our team has been able to save dealers hundreds of thousands to millions of dollars on acquisition prices.

Back to top