Dealer Solutions Mergers and Acquisitions (DSMA) is launching a national program designed to equip Canadian general managers aspiring to own dealerships with the necessary training and financial resources.
The program, called Drive Investment Partners (Drive-IP), will be financed by a consortium consisting of participating banks, active or retired dealer principals and Drive-IP, said DSMA CEO Farid Ahmad.
“We recognized the avenue is for the next generation of business owners, and those will be and are current general managers who are looking for their first opportunity,” Ahmad told Automotive News Canada. “They have the skill, the talent, the knowledge and the experience in operating a business, but their access to capital is keeping them away from being able to buy these stores.”
Eligible general managers will also have access to a two-day seminar conducted by Wye Management, a Mississauga, Ont.,-based automotive training company.
The seminars will take place in 14 Canadian cities this year although the dates have yet to be determined because of COVID-19.
They will help the general managers understand every aspect of buying and operating a dealership, said Ahmad.
“We are creating what we call an incubator of great, talented people in the car business to be able to get ready to understand how to acquire a dealership and how the loans work and how the balance sheet is affected to ensure their success on the acquisition.”
Once Drive-IP identifies “superstar” general managers, they will be interviewed and undergo a process to understand their financial stability. Drive-IP will then match the general manager with a bank and an opportunity to buy a store, said Ahmad.
The program, in the works for about a year, was developed by Ahmad and DSMA CFO Maxime Theoret and formulated in consultation with Steve Quinn, president of the Quinn Automotive Group, which owns three BMW dealerships in Ontario and two Mini stores. It was launched in response to tightening lending standards amid the economic fallout of COVID-19, said Ahmad.
Ahmad and Theoret also consulted with all five major banks in Canada -- BMO, Toronto Dominion, Scotiabank, CIBC and Royal Bank – on the necessary criteria for lending.
“We do the legwork, the heavy lifting, and present case by case to the bank and then give the individual the dealer opportunity,” he said.
Ahmad said car dealers will participate in the transaction as strategic investors and own a percentage of the business with the general manager. As well as bank support and training, the general manager would have a partner with “skin in the game” who would also be a mentor to ensure the successful running of the dealership.
“It’s a win-win for all parties,” Ahmad said.
Drive-IP hopes to announce its first closing deal some time in the second quarter of 2021, he said.