Buying or expanding car dealerships

By John Gavljak - March 29, 2016

Before undertaking a key strategic decision such as buying a dealership or expanding a dealership facility, it is critical to undertake a financial analysis, in order to determine the feasibility of any proposed investment, expansion or divestment decision.

If undertaken properly, financial analysis is a valuable exercise that can achieve the following benefits:

Valuation

Preparation or confirmation of a dealership valuation in order to assist in a buy/sell transaction or to assist in obtaining finance.

Performance Management

Comparing current and forecast profi t to industry Key Performance Indicators, allows identification of underperforming operations, unrealistic profit assumptions or areas of potential improvement.

Feasibility Analysis 

Assists in determining whether a proposed facility spend is financially viable, based on the new facility’s impact on
expected future profits.

Forecasting

Allows the identification of payback periods of a facility investment from expected future profi ts. In addition, it provides a dealership with budgeting ability and analysis of expected outcomes under predetermined operating assumptions.

Our strategic financial analysis tool will deliver the above benefits and can be tailored to meet any investment analysis required.

Our analysis tool includes the following elements:

  • Financial model which is used to undertake a financial analysis.
  • Sensitivity analysis on the fi nancial model (e.g. what happens to forecast total dealership profit if monthly unit sales drop by 5%) to assess risk ranges.
  • Comparison between the forecast profit and loss in the financial model against key performance indicators for automotive retailers or indicators tailored to the operating conditions of the client to determine adequacy of projected results. 
  • Payback period analysis. 
  • Detailed financial ratio analysis, including profitability and liquidity ratios.

If required, we can generate an integrated profit and loss statement, balance sheet and cash flow statement, for submission to your financier or for Information Memorandum purposes (i.e. if you are selling your dealership).

Each strategic financial analysis report is specifically tailored to provide relevant and individual transactions. 

On completion of the report, we will present the results of the report, and how the results will impact the next stage of the transaction, along with providing suggestions on a subsequent course of action.


Contact our experts


Other articles


 

Top of Page


 Back to Automotive




IN THIS SECTION:


Rob Southwell

Rob Southwell's picture

Sydney

Managing Partner and Partner – Private Business and Family Advisory


> View profile

Brendan Britten

Brendan Britten's picture

Melbourne

Managing Partner and Executive Director/Partner- Business Advisory and Assurance


> View profile

Nigel Fischer

Nigel Fischer's picture

Brisbane

Managing Partner - Private Business and Family Advisory


> View profile

Michael Minter

Michael Minter's picture

Newcastle

Managing Partner


> View profile

Leon Mok

Leon Mok's picture

Perth

Managing Director


> View profile

Tom Verco

Tom Verco's picture

Adelaide

Managing Principal - Private Business and Family Advisory


> View profile



Partnership fraud

SUCCESS

Paperwork and independent advice saves partnerships from fraud

Discover more

Kia Ora Horse Stud

CASE STUDY

Pitcher Partners fills a Financial Manager gap to keep the business on track

Discover more

Fuel Injection Company Administration

LEADERSHIP

A fuel injection company began life as an Australian public company before being acquired by a UK publicly listed company while in the research and development stage of a “green...

Discover more



@PitcherPartner FAMILY FUN | Kids & parents alike had a wonderful day out at our Perth firm's recent Family Day. Held at the Landsd… https://t.co/jmPJWi3daC