systems (DMS) contracts, and any obligations to dealership customers, such as, “we-owes,” service contracts, etc.; (v) list of any claims, pending litigation and other pertinent documentation; (vi) list of dealership employees, including job descriptions, pay plans and benefits, as well as and any union agreements; (vii) if the dealership real estate is also proposed for sale, existing environmental reports, property appraisals, surveys and other reports relating to the real estate. This information should be accessible in the early stages of negotiations, ideally before negotiations occur. Relegating this important aspect to some time afterward could cause undue delay and misunderstanding between the parties or jeopardize a successful closing. Before definitive purchase agreements are prepared and signed, negotiations with prospective buyers might be documented in some form in writing, such as through a letter of intent (LOI). While a letter of intent is not a substitute for the formal definitive purchase agreements required by the parties and the OEMs to start the approval process, it serves to provide a general outline of the parties’ understanding and proposed terms and conditions of the forthcoming definitive agreements. The parties should consult with experienced buy-sell counsel well before signing the letter of intent, as the LOI itself might give rise to an argument that it is a binding contract, creating legal obligations of the parties. Throughout the process of the dealership’s preparation for a prospective dealership sale or acquisition, the dealer should work with legal, financial and accounting professionals and consult with them as the buy-sell transaction proceeds from inception to OEM approval and successful closing. The buy-sell attorney should be experienced in buy-sell transactions in the automotive space, along with automotive franchise law, OEM franchise agreements and interactions, and state licensure and regulatory laws impacting the transactions. Similarly, the accountants should be experienced in dealership operations and automotive industry transactions and be postured to maximize sale proceeds and minimize tax consequences in the transactions. A financial advisor or planner can also assist the dealership with managing post-sale proceeds to achieve expressed financial goals. Dealership brokerage firms can provide valuations and relevant market conditions information, as well as manage the transactional process along to a successful closing. Each member of the selling or acquiring dealerships’ teams plays an important role in assisting their dealer clients to mutually achieve their goals. In 2025, the automotive industry will rapidly evolve, with technological advancements, changing customer preferences and a new regulatory framework reshaping the market horizon. For automotive dealers looking to sell or buy dealerships, a strategic approach to planning and preparation ensures that they navigate these complexities effectively, mitigate risks and seize opportunities for growth or divesture consistent with their goals. 1. Automotive News, December 2, 2024. 2. The Kerrigan Dealer Survey, 2024. Julie A. Cardosi is Principal of the private firm, Law Office of Julie A. Cardosi, P.C., of Springfield, Illinois. She has practiced law for nearly 40 years and represents the business interests of franchised motor vehicle dealers throughout Illinois. She has represented dealers in hundreds of buy-sell acquisitions and related transactions. Formerly in-house legal counsel for the Illinois Automobile Dealers Association, she concentrates her private practice in the areas of dealership operations and compliance matters, transfers of ownership, mergers and acquisitions, franchise law, commercial real estate transfers, dealership employment and other areas impacting day-to-day dealership operations. She has also served as former Illinois Assistant Attorney General and Deputy Chief of the Consumer Fraud Bureau of the Attorney General’s Office. The material discussed in this article is for general information only and is not intended as legal advice and should not be acted upon as such. Dealers should consult their own private legal counsel for application to their specific circumstances. For more information, Julie can be reached at jcardosi@autocounsel.com, or at (217) 787-9782, ext. 1. 11 Illinois Automobile Dealer News
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