SUCCESSION PLANNING
Instead, most transactions today involve third-party buyers— often larger dealer groups looking to expand territory and scale operations.
Several factors are driving the shift:
Lifestyle considerations: Many second-generation family members have seen the volatility and demands of dealership life and are choosing different paths.
Financial barriers: Rising dealership valuations make internal buyouts difficult, especially with lending constraints such as SBA limits.
Operational complexity: Modern dealerships require leadership across finance, operations, OEM relations and workforce management, which has a steep learning curve for successors.
“ There’ s a growing group of buyers that are very bullish,” Albero said.“ In their minds, they have to grow. If they don’ t take the opportunity, someone else will.”
That urgency has fueled consolidation across the industry, particularly among well-capitalized dealer groups. Still, internal transitions remain viable, but only with planning.“ Internal transitions tend to show up when there’ s a clear next in line and the owner prioritizes legacy and continuity,” Nasca and Matel said.“ The trade-off is that these deals are often constrained by financing and can take longer.”
What drives value today
If there is one theme shaping dealership exits, it’ s this: buyers are paying for consistency, not potential.
“ Dealership valuations today are being driven less by topline revenue and more by the quality and consistency of earnings,” Nasca and Matel said.
That means: Clean, accurate financials Stable multi-year performance( typically three to five years) Strong parts and service departments Disciplined inventory management A business that operates independently of the owner
Albero echoed that perspective, emphasizing how value is broken down.
“ It’ s not just the building,” he said.“ It’ s inventory, parts, used equipment, retained earnings— every component has to be evaluated separately.” One of the most common pitfalls? Inventory. Dealers often overestimate its value, particularly when it includes aged or obsolete parts.“ We’ ve seen millions of dollars in obsolescence that won’ t be purchased by the buyer,” Albero said.
Similarly, informal accounting practices, commingled expenses and unclear department-level performance can quickly erode buyer confidence.
“ Owners most often leave money on the table by failing to prove consistent profitability,” Nasca and Matel said.
Red flags that can kill a deal
Even well-performing dealerships can encounter issues during a sale process. The most common problems fall into two categories: financial and operational.
Financial red flags include: Inconsistent reporting Unresolved tax exposure Excess or aged inventory Questionable receivables
Operational red flags include: Heavy dependence on the owner High technician turnover Weak warranty processes Underinvestment in facilities
“ These issues create uncertainty,” Nasca and Matel said.“ And uncertainty leads to lower valuations or deals falling apart.”
Due diligence today is far more intensive than many owners expect. Buyers dig into everything from inventory turns to departmental margins to customer concentration.
That scrutiny can be a surprise for sellers who have not prepared in advance.
The OEM factor
Manufacturer relationships play a critical— and sometimes complicated— role in succession.
Dealers must secure OEM approval for ownership changes, and not every buyer will meet those standards.
“ I have to be confident the buyer will get approved,” Albero said.“ You can’ t just bring in anyone.” OEMs typically look for: Industry experience Financial strength Market alignment Long-term growth potential
At the same time, manufacturers often require ongoing investment— facility upgrades, expanded locations or brand alignment— which can frustrate owners nearing retirement.“ It’ s a marriage,” Albero said.“ There has to be give and take.” For sellers, strong OEM relationships can enhance value. Weak or strained relationships can derail deals.
www. OPE-Plus. com May 2026 OPE + 17