What a buyer looks at on your lot
| Units and gross | Cars sold per month and front end gross per unit, pulled from your dealer software, for three years. |
|---|---|
| Back end income | Financing reserve, service contracts and add on products, and how steady that income has been. |
| Inventory and floor plan | What is on the lot, what is owed on it, and how long cars sit before they sell. |
| The lot | Lease terms or ownership, frontage, zoning and room for the number of cars you sell. |
Inventory Is Priced Separately
In most dealership sales, the business is priced on cash flow, and the cars on the lot are added at cost on closing day. That way neither side argues about inventory months ahead of time.
Whatever floor plan line you carry gets paid off at closing. Buyers usually arrange their own.
Cars that have sat for months are a sore point. Clear out aged units before closing, or agree up front how they will be valued.
How the Money Is Made
Buyers look closely at where profit comes from. Front end gross on each car is one part. Financing reserve, warranties and add on products are another, and lenders look hard at whether those are earned in a way that will last.
If you run buy here pay here deals, your notes receivable are their own asset. Expect a buyer to study collection history and default rates before agreeing on a value.
Licenses Do Not Simply Pass Along
Dealer licensing in Michigan runs through the state, and a new owner typically has to qualify on its own. Lender relationships, auction access and any franchise or brand agreements carry their own approval steps.
Ask your attorney early which approvals the buyer needs, so closing doesn't stall waiting on paperwork.
Records That Hold Up
- Deal jackets that match the books
- Sales tax collected and paid on every retail sale
- Reconditioning costs tracked per car
- Online reviews and lead sources
Sales tax is a big one. Because a buyer can be held liable for your unpaid state taxes, they will hold back money until you show a clearance. See the Form 5156 guide.
Pricing the Store
Most independent dealerships sell as asset sales. Steady volume, a good lot and clean deal records push the multiple up.
A store that depends on the owner's relationships with auction buyers and lenders sells for less unless those relationships are handed off.
Read what buyers check in due diligence to get ready. Then send the short form or call (313) 555-0152 for a number.