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Posts Tagged ‘Real Estate’

2017 in Review: Trends in Retail Auto Mergers and Acquisitions

In any industry, an annual retrospective reveals trends that signal a shift away from the past and toward the future of the industry. A look back at 2017 in the retail auto sector calls attention to some trends that were expected and others that appear to be prognostications finally coming true.

Let’s take a moment to review some of the most important developments in the auto retail sector in 2017.

The Value Disconnect

The ongoing battle between buyers and sellers with respect to the value disconnect continued in 2017. We have seen some movement perhaps, to sellers looking at 2017 performance and realizing that while an auto dealership is still a good business, the sales increases were not the same as in recent years past. This may have had the effect of driving more sellers to market thereby creating volume in 2017.

Photo © Justin Luebke on Unsplash. | Used with permission.

Succession Planning or Lack Thereof

For years pundits and anyone watching the industry have been forecasting mergers and acquisitions (M&A) activity would rise to some degree because of family succession. It took some time, but in 2017 this appears to have started. This type of transaction has taken many forms. Some family sellers have determined the next generation will not (or cannot) operate the business, so they put the family business up for sale. In other instances, no “next” generation is available to take over, so the owner looks to transfer the business to trusted management or a third party. Unfortunately, I have also started to see forced sales because the owner either

Five Issues That Arise In All Transactions

As 2017 gets rolling, I am just getting started on a few new buy/sell transactions, giving me the opportunity to reflect on some issues that commonly arise as buyers and sellers negotiate terms of their agreements. These issues probably will not surprise you, but if you are buying or selling a business — especially an auto dealership — the insight I provide here will prepare you for some of the human factors and resulting hurdles you may likely encounter.

Real Estate: The Asset That Is Part of Every Deal

I was talking with a prospective new employee last week, and I asked her if she had any experience with real estate matters in her transactional experience. She gave me a quizzical look and her response stated that she did corporate work and that real estate was not part of what she typically did. I wish this was the only time I encountered this response when discussing mergers and acquisitions or “corporate” representation, but it reflects a common misconception. The fact is that real estate is an asset that is a part of every deal.

Anticipating Increased Complexity

When I look at a transaction or a company, I often find that the issues involving real estate are the most intense and often the most difficult to resolve. The issues also tend to vary considerably because companies and individuals treat real estate in a wide spectrum of ways in a deal. In its simplest form, real estate could be an owned asset being purchased. However, even in these “simple” situations, if the party holds and financing the real estate separately, it can add significant complexity to a transaction, especially if it is one of the higher dollar assets related to the business.

At its most complex, the real estate may be a leased asset unrelated to the business, and the change in ownership or operation may signal an opportunity to renegotiate the lease or refinance the property. Adding to the complexity of dealing with leased properties are the practical reality of having to coordinate with a third party that is not part of the transaction to obtain a lease amendment or consent. The phrase,