June 12, 2025 - We are noticing more mergers and acquisitions (M&A) among heavy equipment dealerships across the country. One thing holds true across most of the projects we see: The owners would have benefitted from involving financial specialists earlier. Financial specialists are able to provide insight on best practices that leaders should consider in order to maximize a dealership’s value before entering a transaction.

If you are considering the next phase for your heavy equipment and machinery dealership, this article offers key questions to ask yourself which may help lead you to the outcome you want.

What is Your Motive for Selling?

Any discussion of M&A should always begin with the seller’s or buyer’s motive. Knowing that can determine your timeline and guide you to the sales method that would work best.

On the one hand, many dealership owners feel the economy is worsening. They are experiencing the deep effects of inflation, interest rates, and now tariffs, as well as witnessing their effects on business buyers. Tractor and combine sales were down in 2024 and have declined 37% since April 2021. The farming industry is shrinking and consolidating. Meanwhile, construction is faring better, with pockets of growth but also stagnation. All of this lowers the demand for your equipment and may inspire buyers to put off purchases.

On the other hand, some dealerships are thriving. They may have been the largest player in a semi-rural market where their competitors closed. Now, their market reaches across more counties. Or they are in a particularly lucrative niche, like selling mini excavators to landscapers, and are cash rich and ready to acquire competitors.

Some heavy equipment dealerships we know have prospered by moving into the IT support space. They now offer phone and remote-access tech support for all digital interfaces.

A third category of those planning to sell are owners contemplating succession. Eighty-five percent of heavy equipment and tractor attachment dealerships are family businesses and the founders are interested in passing the business along to the next generation. As we discuss next, this introduces additional complexities, but also opportunities.

What is Your Timeframe?

If your dealership is distressed, you may not feel like you have time on your side. However, selling is not the only option. Some owners have not considered the full range of financing options available to them, such as selling stock or debt financing, which would allow them to retain control. A finance specialist may be able to present alternatives.

Further, there is often a lot that even a distressed owner can do to turn the dealership around — though it requires clean books and accurate financials. A specialist can analyze your profit and loss numbers and balance sheet to identify:

• Obvious costs you can cut
• Ineffective sales commission structures
• Areas where training could improve the bottom line

If you have time on your side and are serious about selling, start by having an M&A specialist conduct an official valuation to determine the true dollar value of the dealership. Whether selling or buying, knowing your number is vital.

What is Your Preferred Method?

You can sell your dealership outright, or you can sell a minor stake. There are a variety of options. Reflect on your motive and write down your goal with this transaction. For some, it is important for the dealership live on and stay within the family business. For others, it is purely about the payout, or the freedom to retire.

An M&A specialist can then work back from your goal to advise on how to structure a transaction, and how things might go. For instance, a buyer may want you to stay on for some years or require you to have a sufficiently competent general manager, which means your sale can suddenly turn into a talent search. Or the buyer may not buy entirely with cash, in which case the payment distributions will be made over a period of years, which can change your retirement plans.

Consider enlisting a specialist’s help with:

• Valuation
• Benchmarking and metrics
• Talent search
• Due diligence
• Structuring the deal
• Estate tax planning
• Assistance in closing
• Succession strategy

There are additional considerations if you plan to pass the dealership along to family. Will those family members run the dealership, or will they be non-participating owners while a general manager keeps it up? If you plan on passing the entity along to children, there are exclusions to consider.

If your children will work in the business, consider sending them through training now, to learn how to run a dealership. They should work in several roles before they are ready to assume leadership.

Beyond all that, there are plenty of compliance matters to attend to before the business is ready to sell. Gather your documentation on:

• Federal and state tax compliance
• Your inventory method
• Fleet and rental tax
• Reinsurance consulting and tax planning
• Facility credits and cost segregations on real estate
• Assurance and financial statements
• Leases and properties
• Any covenants
• All current banking matters

Successful Transactions Start with Strong Finances

An early financial and accounting analysis of your dealership can help you understand what options are available to you, given the health of the business. That health is a function of cash flow, but also of operations, assets, relationships, and team morale. All of these are aspects you can work on to increase the value of that transaction. The earlier you know the ground truth, the more effectively you can act.

To learn more about how to get the most from your heavy equipment dealership transaction, reach out to Craig Todderud or your Automotive Dealership Industry Practice representative.