Buying or Selling a Dealership and Dealership Properties
The most common reason clients engage MD Johnson, Inc. is for the purpose of assisting in the sale or acquisition of an automobile dealership, or group of dealerships. For 16 years, more than 200 times and nearly $4billion in transactions, MD Johnson, Inc. has assisted both buyers and sellers of automobile dealerships -both public and private-in the sale or disposition process.MD Johnson, Inc. is unique among all companies in dealership acquisitions and sales. Our process is to provide a formal valuation of the potential dealership sale or acquisition, at our expense, up front. We strongly believe in strategic planning and not going to the market prior to being ready to complete a transaction. Our staff includes transaction managers, a dealership analyst and a host of professionals who assist in planning and execution. Typical activities performed by MD Johnson, Inc. professionals include:
- Accounting review and formal valuation at no cost to the proposed client
- Estate and post tax cash event review
- Income replacement/planning
- Introduction to wealth management
- Closing process and procedures
- Business close out consulting
- Environmental Science review and consulting
Probably the most common reason for performing a business valuation is that either the buyer or the seller of the business, or both, wish to have an objective and independent professional appraisal of what the business is worth. Often these valuations are used as the basis for the negotiation of the selling price. There are, however, a number of other reasons for getting a business valuation. Some of the most common ones are listed below.Mergers - When two companies merge, it is necessary to determine the relative values of both companies in order to determine the proportion of ownership each set of shareholders will have in the newly merged company. Obtaining Financing - Companies need financing because they are expecting to grow the business and expect, for example, accounts receivable and inventories to increase faster than their accounts payable. Most businesses have created valuable brands, goodwill, customer lists, proprietary processes and knowledge that do not show up in financial statements. Some companies that have large investments in real estate and equipment may find that the earning ability of those assets is far greater than their depreciated book value. A professional appraisal will support management’s request for financing. Estate Tax Planning and Gift Taxes - Determining the value of a closely held business is important for estate planners when determining the value of lifetime gift transfers that include stock. Minority Interests - Many companies try to accommodate minority shareholders who seek liquidity and who may not have good alternatives other than selling their shares back to the company. A valuation is a way of determining the fair market value of the stock in a buy-back. As a Management Tool - An independent and objective business valuation provides an effective way for a business owner to benchmark his business and compare it to other similar businesses in the industry and gain a new perspective. It can help management discover weaknesses in the business as well as overlooked strengths that may be capitalized upon when developing strategic plans or exit strategies. The valuation can be a very useful tool for business owners planning an exit strategy since it can provide valuable insights on how "the market" determines value and what needs to be done to make the business more valuable in advance of the transition.
Succession Planning is based on one simple premise: at some point in the future, every owner leaves their business, voluntarily or otherwise. At that time they will want to receive the maximum amount of money in order to accomplish personal, financial and estate planning objectives.Few business owners give this much consideration while starting or running their business. However, at some point it will become important. Sometimes the exit may be forced upon an owner due to the death of a partner or co-owner, divorce, realization that the competition is winning, pressure from family, or debilitating health. If the process of exiting a business and succession is not done with an organized plan, it will inevitably be done by crisis, perhaps with catastrophic results. Formulating an exit plan will provide a clear understanding of the ownership transition goals and the various steps which will be required to achieve them. An owner/shareholder must begin to become clear about their attitudes to some very basic questions such as:
- How much longer do I intend to work?
- What are the chances of my surviving in good health to that date?
- What would happen to the business if I did not?
- What would the tax implications be and how much after-tax income will be needed when I leave the business?