Car Dealer Insider May 1, 2006
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Car Dealer Insider May 1, 2006

Five essential elements in a dealership buy-sell agreement

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Five essential elements in a dealership buy-sell agreement

The heart of any dealership buy-sell transaction is the buy-sell agreement itself. If properly drafted, the viability and success of the deal will be greatly enhanced. If defective, it is likely the deal will die or, at a minimum, encounter unnecessary expense and delay. The following are the five essential ingredients of an effective buy-sell contract:

  1. Clearly identify what is being sold This may seem obvious, but in my experience vague definitions of operating assets can lead to disputes over service vehicles, signage, and computers. A detailed schedule of assets, even a videotaping, is recommended. As for vehicle inventory, special attention should be given to the inclusion or exclusion of prior model years, demos, program cars, conversion vans and the inventory mix.

Parts and accessories also require special attention. The issues of returnability, obsolescence, and non-factory stock are of primary concern. Even real estate assets require some clarification. For example, is the existing lease of adequate duration? Are off-site storage lots included?

  1. Understand the price Again, one would think that the transaction price would be the one element that all parties would agree on. But that is not always the case. Any confusion over the basic concept of price can be enormously costly to the party that winds up on the "short... (215 of 858 words)

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