Auto dealerships often have agreements with specific manufacturers. There may be restrictions on direct competition in areas with other licensed salespeople representing the same brand, which can hamper expansion.
Existing dealerships can limit expansion opportunities for others in the same market. One way to overcome that limitation is to buy out a competitor. Those considering an acquisition or merger related to an auto dealership may need legal guidance to effectively address the three concerns below.
1. Establishing a fair price
Determining the fair market value of an auto dealership can be very challenging. Business leaders may need help assessing the assets of a competing dealership and estimating its future sales for the purpose of calculating a purchase price.
2. Addressing liability
There’s also the possible risk of litigation that relates to prior transactions conducted by the acquired dealership. Buyers who allege fraud or other forms of dealership misconduct could take legal action against the party who acquired the dealership if appropriate legal protections are not in place. Support while negotiating the purchase agreement can help buyers minimize acquisition liability.
3. Retaining talent
The salespeople, mechanics and other professionals running a dealership are among the most valuable assets the organization has. Taking steps to retain those workers and to prevent the former owner who sells from hiring them away shortly after the transaction can be an important step.
Working with an attorney familiar with auto dealership law can take some of the risk out of a purchase. Owners hoping to expand may need help ensuring they protect themselves from liability, avoid overpaying and do not face unfair competition in the future.