Questions that you may have when thinking about selling your agency

Frequently Asked Questions

The big question is: Should I sell my business? Who would I sell it to? What would I do if I sold it? How do I find a buyer? How much is it worth?

These are the questions every entrepreneur has from time to time. As a general agent in the car business, it has never really been a common thought, as selling an agency was rarely an option-at least for any real money that would make it worthwhile.

A new age is upon us, and there are opportunities for Agents to sell all or part of their business and grow with a new entity, while putting most of their present equity in the bank in cash today!

We have all heard about Agents who sold, or you may have been approached by a potential buyer. Many of the things you may hear may be a bit embellished, but the reality is this is a great time to take advantage of a situation that may be a small window of opportunity while the car business is hot and while the Private Equity buyers and others start making their way into our industry.

These FAQ’s are designed to give you an idea of what a transaction with our company Vanguard Dealer Services and our partner Cornell Capital may look like. It’s important to note that every deal is different and every business owner has different goals when they sell their business, all of which can be addressed in each individual transaction.

What is my Business Worth?

Your business will typically be valued at a multiple of 3 to 7 times earnings.
Multiples are determined by agency size, earnings and geographical location.

For example:
Your net profit last year was $2,000,000. The multiple is 6, so
$2,000,000 x 6 = $12,000,000.

This is your starting point. We are going to use these numbers to keep things fairly simple for illustration purposes.

The buyer would want you to invest 20-30% of the sale price into the new entity, giving you between 70%-80% of the $12,000,000 at closing in cash.

$12,000,000 x 80% = $9,600,000 paid to you at closing. The balance of $2,400,000 you would have in stock in the new entity. Now you are part of our parent company who will continue to grow and make acquisitions nationwide.

What Happens After Closing?

You will continue to run your company as you did previously, however now you will have the working capital and resources to grow your company dramatically. Adding people, technology and other resources is now an option for you whenever needed. Growth will happen almost immediately.

You will have an employment agreement with a great compensation plan, excellent benefits and the entire organization behind you and working with you toward a common goal.

What Happens to my Stock?

Now is the second bite at the apple, another big pay day!

As mentioned earlier, your $2,000,000 company had a multiple value of 6. As the net profits (EBITDA) continue to grow the company puts itself in a much higher multiple bracket. As the parent company grows from $10,000,000 to $20,000,000 and
potentially $30,000,000 of EBITDA, the multiple values go into the double digits creating an opportunity for this company to be worth in excess of $200,000,000, all of which you are a shareholder in.

So you are gaining value in your stock both with any acquisition the company makes and with the organic growth of each individual agency. Your original 20% stock you invested in at $2,400,000 may very well be worth as much as the rest of your company was worth years earlier.

Of course, this illustration is an example, and there are many factors to consider, but this is pretty spot on. This transaction is more of a growth capital partnership than a sale. Where else can you take advantage of all the years of hard work and cash that in for a large amount of money and still continue to do what you know best?

To have a much a more detailed and personalized discussion, just contact us and we will be happy to share more details with you. Don’t wait too long, as the values are very high right now and we are in the acquisition mode. This is the time to get the highest
possible value with the best possible terms.

Have questions? Feel free to reach out to us here