The decision to sell an RV dealership signifies the culmination of years and decades of building your business. Similarly, the process of selling your dealership takes time, too. Especially considering timing the sale right can significantly impact both the sale value and the smoothness of the transition.
So, if you’re considering an upcoming sale or know a sale will soon be on the horizon, understanding the key factors that influence optimal timing is crucial. That’s why we’ve put together this ultimate guide. Keep reading as we cover all the considerations to keep in mind when thinking about your future dealership buy-sell transaction.
The Top Factors to Consider for Selling Your RV Dealership
There are several factors that, when aligned, are the absolute right time for you to sell your RV dealership. Here are the top factors to keep in mind when considering a sale of yours.
Market Conditions
Like any industry, the RV industry operates in distinct cycles but is usually aligned with broader economic trends. For instance, rising disposable income and consumer confidence typically drive increased RV sales during economic growth as households feel more comfortable making large discretionary purchases.
Currently, the market is showing strong consolidation activity with an increase in mergers and acquisitions from private equity groups and large dealership networks across the market. The most successful timing to sell your RV dealership will rely on recognizing where the industry is positioned in its cycle. Key indicators to monitor include:
- Consumer confidence levels
- Interest rates
- Manufacturer production rates
Regional market conditions will also play a pivotal role, as different geographic areas may experience varying demand levels and economic strength. To monitor conditions here, watch for trends in local discretionary spending, tourism patterns, and demographic shifts that could impact valuation.
Business Performance Optimization
Another factor that will affect your dealership’s valuation and overall timing is the performance and optimization of your business. Typically, potential buyers will evaluate dealerships on their overall, sustained performance rather than short-term success. Hence, preparing for a sale ahead of time is key for the best timing.
The ideal selling window typically occurs when the business demonstrates consistent growth in key metrics:
- Stable or increasing revenue growth over 3-5 years
- Strong profit margins compared to industry averages
- Healthy inventory turnover rates
- Robust cash flow patterns
The level of your RV dealership’s operational excellence will also affect the timing and valuation of your sale. So, working on improving areas such as your service department, efficient parts operations, and strong customer satisfaction scores will be worth the wait in value.
Another thing to consider for the timing of your sale is implementing a digital infrastructure that can increase its value too. Modern management systems and online sales capabilities are highly valued by buyers and can take time to successfully implement.
Manufacturer Relationships
A lesser-considered area that’ll affect timing and value is the timing of manufacturer contract renewals. Strong relationships with desirable manufacturers clearly increase dealership value overall, so being sure you’ve built or nurtured these as a selling point may take time. The best time to sell, is after securing or renewing key manufacturer relationships but before facility upgrade requirements come due.
As you know, manufacturers require periodic facility improvements or renovations to maintain brand standards; these can range from minor cosmetic updates to major structural changes costing millions of dollars. Selling before these requirements come due allows the current owner to avoid these capital expenditures while giving the buyer the flexibility to plan and implement upgrades on their own terms and timeline.
Personal and Succession Planning
It’s not just the dealership and the market you’ll need to think about. Personally and professionally, you’ll need to assess your readiness to determine optimal timing for selling. Beyond market conditions, personal readiness often determines optimal timing. Here, key considerations you should think about include:
- Retirement goals and financial requirements
- Interest of family members to continue business
- Management team preparedness for transition
- Personal energy levels and health considerations
- Alternative business or investment opportunities
All in all, the right time to sell for you is when personal timing aligns with the most favorable market conditions and strong business performance.
Pre-Sale Preparation
Of course, even when you pinpoint the ideal combination of personal timing, favorable market conditions, and strong performance, you still need to be prepared with the essentials to sell. So, it’s important to know that proper preparation itself typically takes 12–24 months, regardless of market conditions. During this time, your dealership advisor will help you collect:
- Organization of financial records and tax returns
- Documentation of operating procedures
- Updated customer and vendor databases
- Resolution of any legal or regulatory issues
- Completion of planned facility improvements
While the list might seem daunting to collect, keep in mind that well-prepared dealerships often command premium valuations and experience smoother due diligence processes.
Financial Planning
Like any big purchase or sale, you’ll also want to consider the tax implications when thinking about the timing of your sale. Like working with a dealership advisor to navigate the sale, you’ll want to work with your financial planner or advisor to help identify optimal transaction structures and timing to maximize after-tax proceeds, considering the impact of:
- Capital gains tax rates
- Estate tax exemption levels
- Available tax deferral strategies
- Post-sale investment opportunities
- Wealth transfer objectives
The Final Word: Working with a Dealership Advisor
As you can see, the optimal time to sell your dealership is determined by aligning multiple factors rather than any single condition. While market timing is crucial, personal and business readiness and preparedness are also key. Even harder, you still have to operate and manage your business while considering the above.
Working with an experienced, expert dealership advisor becomes crucial in this situation. RVBS is one of the leading advisory buy-sell groups for RV dealerships and supports owners from beginning to end of the sale process.
From building sustainable value through operational excellence to monitoring market conditions for advantageous sale windows and even sourcing buyers, RVBS has over 60+ years of combined experience in the industry to use to your dealership’s advantage. Learn more by contacting us directly to begin planning the sale of your RV dealership.
Roger L. Nuttall served as President of Camping World, Inc. from January 2011. Prior to that, he was the Chief Operating Officer of FreedomRoads, LLC from January 2009 to January 2011, and the Executive Vice President and Chief Financial Officer of FreedomRoads, LLC from November 2003 to December 2015. From 1981 to 1983, Mr. Nuttall was a partner at McKay, Nuttall, and Reid, an accounting and consulting firm. Before that, he held various staff and management positions at Grant Thornton LLP from 1974 to 1981. From 1983 to 2003, Mr. Nuttall served as Chief Financial Officer and board member of Blaine Jensen & Sons, Inc., a multi-dealership RV company. He received a B.A. from Weber State University.
Mike has almost 30 years’ experience in the Recreational Vehicle (RV) Industry and provides advisory and consulting services to clients within that industry.
Scott Degnan is the Partner and Co-founder of RV Business Solutions and President of Degnan Management Group, Inc., a consulting firm.
Dom Bookman is the Chief Operating Officer and Investor Relations lead at RV Business Solutions. With 12 years of experience in the tech industry, Dom is a serial entrepreneur specializing in business development, marketing, and growth strategies for leading brands. He has successfully piloted startups and facilitated multiple exits for early-stage companies.