Buying a dealership can be a lucrative investment that offers a number of benefits - an established customer base, a better understanding of the market expectation and the ability to start operations almost immediately.

However, there are a lot of things that you need to consider when completing the buy/sell transaction.

One often overlooked area of the transaction is ensuring that the inventories of the business you are buying, specifically the auto parts inventory, have been effectively analyzed and valued.

This does not simply mean pulling up the company’s financial statements and identifying the book value.

Instead, you need to look at salability of the inventory by thoroughly examining the parts that don’t hold their value - damaged parts, parts being used for work that is currently in progress, parts that need to be returned, obsolete parts, shortage claims, pending credits and the core value on parts that have deposit values.

These parts will affect the saleable value of the inventory and therefore the price that you should be paying to obtain that inventory.

In instances where inventory is not saleable, there are two options available to you:

1. Request a discounted rate for non-saleable inventory and find ways to offload these parts for maximum profit.
2. Require the seller to keep the inventory and exclude it from the transaction altogether.

To ensure that you make the best decision possible for your specific transaction, it is critical that you allow yourself enough time to complete the valuation and are equipped with the knowledge and skills required to identify parts that will or will not sell.

At Pro Count West, we are equipped with the knowledge and experience needed to ensure that you optimize your inventory value in a buy/sell agreement. We will help you identify saleable and non-saleable inventory, as well as find other opportunities to redeem some of the value on non-saleable items where possible.

To find out more about our buy/sell inventory programs, contact our team of experts today!