Automotive case studies

We are engaged as auditors and accountants to a two site franchised dealer in the North West. The business was only recently created and has not had chance to build up significant capital reserves. It is expanding rapidly and outgrown one of its current leasehold locations. An opportunity to move to a new freehold location was identified but the business was struggling to fund the transaction. We were approached to see if we could assist.

Using our network of contacts we were able to identify a potential partner for the existing leasehold location. Following a period of negotiation, this partner was persuaded to pay a significant lease premium to secure the site. This premium together with the avoided onerous lease commitment significantly improved the financial metrics of the deal. As a result a funding partner was able to be found and the transaction progressed. The net result is that our client has been able to move from leasehold to much larger freehold premises providing a sound platform for further growth of the business.

We were appointed by a single site, multi franchise operation to provide ongoing strategic advisory services. The business had been subject to a management buyout in 2011 and had struggled to generate any meaningful profits in the period since. One of the three franchises represented had been terminated and the viability of the business was under threat.

We worked with the management team to identify a replacement franchise which was introduced along with a significant marketing support contribution. The franchise has gradually started to add a meaningful contribution to the site results. At the same time, we have worked steadily with the management team to deliver enhancements to the business in a number of areas, introducing specialist expertise where necessary.

The key areas focused on have been improvements to pay plans in the sales department, significant amounts of work in the parts department (delivered a £100k annualised profit improvement alone), focus on improving used car returns and optimising the utilisation of working capital. The business delivered a £200k profit in its last audited accounts and is set to deliver a £275k profit in the current year.

We are now working with the business to secure funding and negotiate the purchase of the trading premises from the landlord. Longer term, the business plans to use its profits to pay off mortgage debt before selling the company in around ten years’ time.

We were approached by a manufacturer to see if we could assist with a change of ownership of one of their sites.  The business was part of a larger group and the owners planned to downsize and concentrate on their other core brands.  The incumbent dealer principal had an appetite to acquire the business, but only had a limited amount of funds.

We initially assisted by carrying out a valuation of the business which then enabled us to do some work around affordability with the dealer principal.  It quickly became clear that for the deal to work, the sellers would have to delay the receipt of some of their consideration and receive it over a three year timescale.  Detailed negotiations commenced and after a long and protracted process, eventually a deal was struck that both sides were comfortable with.

We then assisted with progressing the deal, including preparing detailed business plans and cash flow and working with stakeholders (bank and captive finance company) to obtain the necessary approvals.  The deal completed and we assisted with ensuring the correct consideration was paid before taking on the ongoing accountancy, tax, VAT, company secretarial and payroll support that the new business requires.