Experienced Personnel can Mitigate Cost and Stress at Buy/Sell Closings
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By Phil Villegas
During my career I’ve been part of dozens of dealership buy/sell closings, and they all have a common thread in that each closing is entirely unique yet will undoubtedly have a certain level of stress associated with it.
To put it simply, the largest stressor of any closing is that one or both transacting parties want to screw the other over. Call it financial discretion or competitive gamesmanship, either way, this approach by many dealers at a closing can often be counter-productive, not to mention very costly if the parties are not properly prepared.
From the calculation of vehicle credits, identification of incentives, validation of fixed assets, valuation of miscellaneous and parts inventories, to the determination of liabilities to existing customers and vehicles that have already been reported as sold, there are several areas for either a buyer or seller to easily be taken advantage of.
Many dealers approach the closing quite casually by assuming the terms of the APA (Asset Purchase Agreement) will guide the closing statement. The reality is that while items such as the Blue Sky and Real Estate price are well defined, there is a lot of wiggle room in the remaining numbers, so much that on an average Buy/Sell, the impact to the overall purchase price can be in the hundreds of thousands of dollars. The financial impact is not just limited to the buyer, poorly equipped or prepared sellers can easily incur significant financial cost.
While the uniqueness of each buy/sell closing cannot be changed, I have learned the level of stress associated with a transfer of ownership can be managed and somewhat mitigated. This can be accomplished by ensuring individuals that are experienced with dealership closing matters are involved early in the process and are in communication with their counterparts from the other side.