By Alysha Webb, Editor and Publisher
A disturbance was felt in the dealership buy sell force last week. It was caused by the news that Warren Buffett’s Berkshire Hathaway has a deal to buy Van Tuyl Group, one of the top ten largest dealership groups in the U.S. and the nation’s largest privately-owned group. Few think Warren Buffett will turn out to be the Darth Vader of buy sell, but his entry into the deal world is bound to cause some changes.
There’s been a lot of talk lately about non-traditional players buying dealerships, but that is often centered on private equity. Berkshire Hathaway is a listed company, but its investment strategy is more like that of a family office. It doesn’t need to sell the investment in a few years to recoup its investment. Like many families, Berkshire Hathaway invests for the long term.
Warren Buffett made it very clear he intends to buy more dealerships. In his case that means more big groups. Some in the industry think that will drive up values, but others say that the new types of investors coming into the market will be savvy about pricing. That doesn’t rule out bidding wars that push up prices but it also means that price inflation above what many feel already exists won’t necessarily come from those new players.
Then there’s the question of how Buffett will get along with the often-demanding manufacturers. Let’s face it, we don’t really know what impact this is going to have. It will be fascinating to watch.
Also in this issue we hear from the chairman of Compli, a workforce compliance management company, regarding what steps a dealership should take to make sure its compliance practices don’t hold up a buy sell deal. Put your HR house in order pretty much sums it up.
Van Tuyl Group likely already has the workforce compliance management issues tidily arranged at its 78 dealerships. If not, it has a little bit of time. The sale isn’t expected to close until the first quarter of next year.