Dealership Buy Sell: The Best Time or A Good Time

RV dealerships are selling at a steady pace to larger consolidators. Why are dealers selling? Is this the best time for me to sell? Owners have spent years building their business, and now they are beginning to think about the best time to sell it.

You don’t want to sell too early. And you certainly don’t want to sell too late — but how will you know when it is the ‘right’ time to sell?

Candidly, you’ll never know for sure when the best time is to sell. Instead, you should be looking for a good time to sell.

Of course, the answer to that question will vary depending on your specific circumstances.

However, some general guidelines and thought processes can be applied to your situation, which can help you discover the right time to sell.

The guide below will help you find some key considerations you can apply to your dealership and your circumstances.

First, let’s review some criteria to determine whether your dealership is ready to sell. Then, we’ll dive into signals related to the RV industry and market, which can either show you the green light — or throw up a red flag. Importantly though, you must realize that there is no one single factor that will tell you it’s time to sell. As you’ll see, there are several factors working in unison that can indicate a good time to sell.

Is your dealership ready to sell?

You first need to evaluate whether your dealership is ready to sell.

Generally speaking, a good time to sell is when your company has a consistent growth history, with a relatively significant growth trend in recent years. Keep in mind that precisely what determines a ‘large growth trend’ will vary greatly within the RV industry, especially coming off the 2020 and 2021 Pandemic tailwind. What never changes, however, is the fact that growth is a key component buyers will look for.

You need to objectively demonstrate recent growth to potential buyers (aside from the Pandemic lift). By doing this, you’ll be able to defend the price you seek when you enter your dealership into the market.

Once you’ve confirmed you can show and defend your growth; you need to establish how much you’ll be able to sell your business for, to see if that aligns with your personal goals (which is covered a little later).

Note: Most RV dealerships are acquired by other RV dealerships. Nearly every RV dealer experienced record sales in 2021. You will have to defend your 2018, 2019, and 2020 (same store) sales to any new potential buyer.

Demonstrating growth and using your dealership’s growth as an indication of value will require some preparation. Deciphering how much you think your business is worth — based on the effort, sacrifice, and time you’ve put into it — is often different from the objective price a buyer is willing to pay.

Frequently, small business owners will turn to business brokers or investment bankers for a valuation. Having this type of unbiased, third-party valuation will also make your asking price much easier to defend during negotiations with potential buyers.

Can current market conditions facilitate the sale of your dealership?

Certain market factors will always affect business sales. Sometimes these factors will benefit you as a seller, and sometimes they won’t.

In general, take a look at two key questions to get a better idea of how market forces can impact your sale:

• Are there other RV dealerships (like yours in both size and operation) that were sold or acquired in the recent past?

• Did larger dealers acquire smaller dealerships?

Reviewing the history of dealership sales — like yours — over the last few years is beneficial for many reasons.

First, it can give you an idea of what you could get for your dealership. In one aspect, this can be very valuable as it shows how much buyers have paid when it comes to comparable dealers. Keep in mind, however, that this will only be a general idea. You will lack knowledge concerning the private details, which are frequently both the foundation and structure of a deal. Working with an advisor who helped facilitate and structure those sales can benefit you as a seller.

In general, there are several market factors that can provide a solid indication of a good time to sell:

• a high volume of comparable RV dealership sales

• an upward trend of sale prices

• an upward trend of strategic acquisitions

• relatively low taxes

• favorable debt financing

According to Fit Small Business, a thriving industry is a clear indication of a good time to sell:

If your business’ industry is thriving, it’s a good time to sell your business and move on to your next project. A business in a thriving industry will likely sell more than if your business’ industry is struggling. You can take this opportunity to liquidate your business while there are more customers interested in buying it at a good price. It’s essential to pay attention to industry trends, as it will benefit you when you decide to sell.

It may feel counterintuitive to sell when things are going well, but that is precisely the right time to sell. Most buyers look to acquire a business that is on an upward trajectory, so you’ll have more interest and likely will be able to sell more quickly.

Another important note: Don’t be discouraged because of a poor or weakening economy. This especially applies to RV dealerships looking for strategic acquisitions. Sure, when the economy is booming, acquirers will have the extra funds to invest in smaller businesses and take on more risk. But when times are tougher, their own profits may be under pressure, which can drive them to look for external growth through acquisitions.

Are you personally prepared to sell your dealership?

There are two main parts to this — and both are often looked past until it’s too late.

The first part is a bit more obvious: finances. Do you have the financial security to advance to the next stage of your life?

Each answer will vary based on every seller’s individual circumstance, goals, and priorities. That’s why it’s a good idea to go over your future goals and understand the financial needs required to fulfill them. Even an exercise as simple as writing them down can help. Remember that this typically won’t involve your individual needs alone, but your family’s needs as well.

The second aspect of your preparation is a little different.

You might be very attached to your dealership, maybe even more than you think. You grew this business from the ground up and likely invested a significant portion of your life into its success.

The big question is this: are you ready to walk away from your dealership without looking back?

For lifetime entrepreneurs, answering this question will be easy. They’ll be ready for the next challenge they’ve likely already had their eyes on for quite some time: the next business to build, grow, and sell.

For others, however, this aspect might not be as easy to handle.

If your RV dealership has been a lifelong endeavor, you might be unsure about what to do next.

This could take an honest, personal assessment to analyze what drives you and how you can continue to satisfy that drive through other means. This ought to be established before a business transaction takes place.

All in all, understanding yourself and your motivation can ultimately save you from a major obstacle some RV dealers experience: burnout.

If you feel burnt out when it comes to running your dealership, the consequences can be brutal. Burnout can lead to an anxious, immediate ‘need’ to sell a business, which can result in a premature sale at a less than favorable price.

Know the signs of burnout, and don’t let it affect the proper compensation of everything you’ve put into growing your business.

Closing Thought — Look for a good time, not the perfect time

In the end, there is no perfect time to sell. Even if there was, you would never know this time until it had already passed, rendering it impossible to spot beforehand. All you can identify is a good time to sell. Notably, most owners will look for one overarching sign— above all others— directing them to sell. This is not a recommended approach. What you need to identify is rather a harmony of three main factors:

1.     Your dealership being ready to sell.

2.     Market forces that can support the successful sale of your dealership.

3.     Being personally prepared to sell your dealership.

In the end, most business owners don’t complete the sale of their business on their own. Think about it: you’re an expert at building and operating a business. You’re not an expert at selling them. Selling an RV dealership is often a complicated, unfamiliar, and daunting task. That’s why turning to an experienced buy-sell advisor can yield significant benefits. They’ll help you maximize the sale of your business, allowing you to receive a fair-priced paycheck at the end of the day.