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Donald Rumsfeld and Dealerships

By Phil Villegas

“We go to war with the Army we have, not the Army we wished we had.” is the essence of a Donald Rumsfeld quote I use often in our dealership consulting practice. 

It’s a common reality in our line of work we are presented with circumstances that can often seem less than ideal. Whether it’s a buy-sell due diligence, internal audit or a forensic investigation, we always seem to find our dealers put into a circumstance where items such as data, financials, personnel and/or documents are missing as part of the equation.

In certain circumstances this lack of necessary elements to solve the equation is completely innocent or unintended, these situations are relatively easy to adapt to. However, it’s when the necessary elements are intentionally or deceitfully withheld that leaves us questioning the missing items in much greater detail and with significantly higher levels of scrutiny than if we were simply provided the requested elements in the first place.

On a few occasions, we have encountered selling dealers that refuse to provide their Dealer Statements. Arguments from these dealers have included “…you are buying the store for a fixed price, you know how many cars we sell, you don’t need to see our financials” or “looking at our financials does nothing for the deal, you know what this franchise and land is worth in the market, either you pay what we want or you don’t”, among other similar excuses for denying access.

While our initial instinct may be to advise the buying dealer to tell the selling party to “go pound sand” due to their unreasonable behavior, we always opt to help our dealer navigate these circumstances the best we can. In scenarios where dealer statements have been withheld, we’ve been able to map out the revenues of these obstinate dealers with external data points in order for us to formulate our own composite for our clients.

It is under these circumstance that another great quote from Donald Rumsfeld emerges to help guide us about the things we know:

  1. There are things we know that we know.
  2. There are things we know that we don’t know, and
  3. There are things we don’t know we don’t know.

Keeping this third element to a minimum is always our primary objective when less than ideal circumstances are presented to us.  It is at this point we go the battle with the army we have, not the one we wish we had. 

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