Evaluating a Dealership Buy-Sell Advisor: 8 Questions That Matter
@griffinadbr808
There is a moment, usually late at night, when a dealer principal stops wondering whether to sell and starts wondering who should help. That second question deserves as much care as the first. A dealership buy sell advisor will sit between you and the most important transaction of your working life, so the interview should be serious.
One firm that publishes its sell-side approach is MD Johnson, Inc.; its five-step process is laid out at https://mdjohnsoninc.com/sell-your-dealership/. Whoever you talk to, these eight questions will help you compare.
Eight questions for a dealership buy sell advisor
1. Do you represent only the seller?
Some intermediaries try to serve both sides. Ask directly whose interests they protect. MD Johnson describes itself as an exclusive sell-side advisor, and says its fee is charged on one side only.
2. How did you reach your value estimate?
A credible answer mentions several years of financial statements, adjustments for non-recurring expenses, the real estate, and the local market. Be wary if a number arrives quickly and sounds unusually high. MD Johnson's private briefing for sellers lists inflated valuations among the costliest mistakes when hiring an advisor.
3. How have your past estimates compared with final prices?
This is the question that tests question two. MD Johnson reports that its original valuations have historically come within 5% of the selling price. Treat any firm's answer as its own claim and ask how it is calculated.
4. How are you paid, and when?
Ask about retainers, monthly fees, success fees and expenses. MD Johnson says its fee is paid at closing, only by its client, with "no retainers ever," and that its expenses are its contribution. Whatever the structure, get it in writing.
5. What does the tail clause say?
Many engagement agreements include a tail period, during which a fee may still be owed if you sell to certain buyers after the agreement ends. Ask how long it is and which buyers it covers. Have your attorney read it.
6. Who will actually work on my deal?
Senior people sometimes pitch and junior staff then do the work. Ask who will value the store, who will talk to buyers, and who will be at closing.
7. How will you protect confidentiality?
Ask about NDAs, how buyers are qualified, when sensitive data is released, and how store visits MD Johnson valuation are handled. A leak can cost you staff and customers.
8. How do you handle manufacturer approval and closing?
In a franchised sale the factory must approve the buyer. Ask how the advisor chooses buyers with approval in mind and how they manage due diligence. MD Johnson lists factory submission and an onsite closing with the seller's attorneys and CPAs as its last two steps.
What good answers sound like
Good answers are specific and calm. They describe a process, name the documents involved, such as the Memorandum of Sale, Letter of Intent and Asset Purchase Agreement, and admit what is uncertain. Weak answers lean on big numbers and urgency.
It also helps to listen for how an advisor talks about risk. Every deal has weak points: a facility issue, a soft used car year, a lease that needs work. An advisor who names those points early, and explains how they would present them to buyers, is usually more useful than one who says everything looks perfect.
A note on your own homework
Before the interviews, gather three years of statements, a summary of any real estate you own, and a short list of your goals: price, timing, staff, family. Reading general background from the National Automobile Dealers Association can also help you speak the same language as the advisors you meet.
Choosing a dealership buy sell advisor is not about finding the most confident voice in the room. It is about finding the one whose process you can check.