Reimagining Talent in Automotive M&A

August 17, 2022

Dealership sales and acquisitions are at an all-time high, with the potential for 400 or more transactions to be completed in 2022, up from 288 in 2020, and 216 in 2018. A near-100-percent increase from pre-pandemic numbers might be hard to conceive of, and this pace can’t remain the norm forever — but for the time being, it’s the way of the market and it shows no immediate signs of stopping.

In the current unprecedented environment, every dealer principal must consider themselves to be in deal-making mode — ready now to evaluate and perhaps act on opportunities to sell or buy. You may be pursuing an expansion strategy or considering divestiture. Or, you may have no specific plans, but want your organization in position to move fast on either side of the ball. When it comes to your franchise’s marketability, you have to think about every day like it’s a President’s Day sale, and you need the best team you can build, on and off the floor.

Meet Your New Customer on Their Terms

If you feel the need to adjust (and almost everyone will) in the current climate of high valuations and concurrent high expectations, there are many steps you can take in the short and long terms, including

  • Upgrading your digital dealership
  • Upgrading your sales process
  • Elevate your service department’s performance
  • Leverage your CRM assets
  • Get EV savvy
  • Raise your staff’s customer expertise

Pursuing any or all these priorities will benefit your dealership’s performance and value. But if being in the dealership franchise market – with or without transaction intent – is your primary objective, there are additional requirements to be in the game, and meeting them may require bringing in contracted talent.

You’re in the Big Leagues Now

In addition to raising your marketing/sales/fixed ops/CRM game, the new landscape is characterized by elevated financial/legal expectations, compared to the simple “handshake” deals of the past. The sway of publicly-traded corporations in the franchised dealer space has imposed greater scrutiny of all on-the-market dealerships. Buyers and sellers both need to meet strict standards in presenting their assets, liabilities, and performance, if only to demonstrate readiness to meet stricter Federal compliance standards.

Also, while outstanding ROI and CS are as important as ever to a high multiple, legacy valuation methods may not translate those strengths clearly into the “enterprise language” that larger organizations apply in their decision-making process. For instance, a store may be an outstanding stand-alone proposition, but will it fit into a culture of multiple stores relying on common back-office processes?

DCG finds that more sophisticated reporting standards allow non-dealer strategic investors to objectively evaluate the investment value of a franchise or platform and move more quickly to acquire it. To make your dealership “visible” to the full range of potential buyers, we advise framing your dealership according to the new expectations.

Enough People with Enough Hours?

Implementing any or all of these imperatives would help raise your franchise’s price multiple or enhance your ability to successfully absorb an acquisition. But can you do it? Do your current staff and consultants have the capacity to make meaningful progress toward these objectives by the end of the year — while they are already busy doing their best for your store on a day-to-day basis? 

In almost every case, the honest answer is, “maybe some of it,” or “no, we’ve already got our hands full.” And there’s a wild card in the deck: good dealership personnel are as hot a commodity as the franchises themselves, and someone you are relying on today may opt for a different opportunity at any time.

How to Find and Deploy the Talent You Need

Implementing these and other vital updates that will sharpen your franchise to cut it on the leading edge, you may need to rethink how you employ talent throughout your organization. 

On one hand, everyone knows how difficult it is to attract new staff talent. On the other hand, there are sources to contract discrete expertise in every field. 

  • Specialized performance agencies exist to analyze your fixed operations, sales programs, and CRM operations, and provide a roadmap for optimizing them for your market. 
  • Outstanding marketing agencies can provide you with the latest, most effective online marketing tools. 
  • Online talent marketplaces provide a world of creative individuals who can be precisely contracted to distinguish your dealership in the media.

Finding a “good fit” is one of the most important aspects of successful outsourcing, but just as important is good management throughout the engagement period. Contractor performance depends on client engagement. It is vital to share a clear understanding of objectives and progress, and to maintain an open feedback loop.

When it comes to the financial, legal, and advisement talent to position your franchise in today’s dynamic dealership market — as an active seller, savvy buyer, or opportunistic shopper — DCG’s deep bench of M&A professionals will serve you with the cutting-edge expertise, creativity, and persistence to devise an individualized strategy, so that you make the right play when the moment arises. More than that, DCG’s diverse slate of other offerings are ready to help you out in other, crucial areas, such as our CFO services from DCG Capital.

An integrated, balanced talent strategy should be among your first objectives toward being a high-value player in today’s market. A comprehensive plan that aligns your current staff and hired talent is the surest way to multiply your rate of progress toward achievable objectives.

DCG can help you formulate a robust strategy for readiness in the red-hot franchised auto dealer market. Our extensive industry network of OEMs, financial lenders, dealership brokers, and related professionals helps us create a qualified, competitive environment on both sides of the sale, so that your transaction goes smoothly, without surprises.

Contact DCG Acquisitions to speak directly with one of our automotive M&A specialists. Learn how our expertise can help you get the most out of your next dealership sale or purchase.