Pub. 4 2015-2016 Issue 1

Summer 2015 15 by themselves. Audited statements are always best, but their cost is the highest, a reflection of the complexity of procedures involved. Reviewed financial statements from a reputable CPA—preferably one who works with other auto dealers—may be a good alternative to audited statements. This costs extra, but it will pay dividends in the sale process. Over years of operations, it’s common for financial statements to reflect items that aren’t part of the dealership or aren’t needed for operations. Nonoperating assets, owner- or affiliated-entity loans, and obsolete assets are just a few of the items you should remove before a sale. You want a potential buyer to be able to analyze financial statements that are representative of what they’d be buying, and other information on your financial statements only confuses the process. Additionally, cleaning up your financial records will prepare you for a buyer’s due diligence process. Structure Your DealershipWell Employ the help of skilled advisors with dealership transaction experience to reviewwhether your dealership or group’s entity structure is consistent with a potential buyer’s needs and the owner’s desired proceeds. Restructuring dealership entities—and by extension, structuring a deal—has become muchmore complex in recent years. The sooner this concern is analyzed and a solution implemented, the more favorable the result will be for the dealership owner and the buyer alike. Take Time for Polish Facility upgrades can be a significant expense for dealerships, so a potential buyer will pay close attention to the condition of a dealership and note any expenditures that will need to bemade after the acquisition is completed. From the seller’s perspective, it’s best to complete the improvements prior to sale. Just as your new vehicles are presented in their best condition, it’s important to present your dealership in the same way. When estimating facility expenditures in transaction pricing, a buyer may add extra costs for unknown issues and the inconveniences that come with improvements. This ultimately reduces value to you, the seller. Showing your dealership in its best light will lead to greater interest in the business and the best starting price in negotiations. Key Takeaways To reap the rewards of their transition readiness, dealership owners need to spend sufficient time and effort on planning and preparing for a transaction. Consider doing some due diligence on your own organiza- tion in advance to add value to an eventual buyer, particularly because transaction opportunities can arise unexpectedly.With the items outlined here in mind, you’ll be well on your way to creating lasting value for your dealership—and driving an effective outcome for whatever objectives you have in mind. Diane Anderson Murphy, Senior Manager, Moss Adams, has a p p ra i s e d b u s i n e s s e s a n d p e r f o r me d co r p o ra te f i n a n c i a l management since 1981. She provides valuation and consulting services to dealership businesses across the country. She can be reached at (206) 302-6523 or diane.anderson@mossadams.com. Sid Tobiason, Partner, Moss Adams, has practiced accounting since 1978. He advises clients on federal income tax, estate tax, entity structure, the purchase and sale of businesses, ownership transition, and succession planning. He can be reached at (858) 627-1448 or sid.tobiason@mossadams.com . When opportunity presents itself, will you be ready? WWW.MOSSADAMS .COM/AUTOMOT I VE Accounting, auditing, and consulting services offered through Moss Adams LLP. Strategic advisory and investment banking services offered through Moss Adams Capital LLC. Whether you’re looking to merge, sell your dealership, or acquire one, having the right navigator can make all the difference. We’ve helped thousands of businesses protect value, evaluate strategic alternatives, and prepare for the unexpected. Put our knowledge to work for you.