July 10, 2025 • 24 mins
In this episode I’m joined by Arthur J. Madjarian, a guy who’s been neck-deep in retail automotive, pivoted into mergers & acquisitions, and now helps dealer groups grow, exit, and scale smart. If you’ve ever wondered how M&A works in the auto industry, or whether dealership ownership is still worth chasing in 2025, this is your episode.
Arthur talks about real-life strategy, timing, red flags to avoid, and why culture and “friendly money” might just be the most underrated forces in any deal.
We also dive into:
- The real reasons why some people are leaning into dealership ownership right now (despite the noise)
- Why smart buyers are more selective than ever—and what they’re actually looking for
- The risks of skipping estate planning before a sale
- What it takes to become a minority partner in a store, and how to prepare
- The future of real estate in automotive retail and how it could change everything
- Why culture fit isn’t just fluffy talk—it’s tied to profit and survival
If you’re thinking about expanding, selling, or even just getting into the business, Arthur gives the kind of candid insight that only comes from living it.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
MC (00:00):
This episode is brought to you by FlexDealer.
Hey auto industry.
Welcome to this episode of theDealer Playbook Podcast.
We're going to be talking allthings mergers and acquisitions.
(00:22):
Stay tuned.
Today, my guest is Arthur JMajerian.
That is a power name.
I am so delighted to have youon the Dealer Playbook, sir.
Thank you for having me.
We learned pre-show that wehail from the same part of
Canada.
Arthur (00:37):
Correct.
Originally born in Toronto,though my wife transplanted me
to Vancouver.
MC (00:45):
So she's the voice of reason .
Got it, okay.
Okay, and I mean, how do you?
They're so similar and sodifferent at the same time.
Arthur (00:51):
You know, I'd like to say that it's tempered me quite
a bit.
I'd like to say, you know,think of Toronto, like New York
City and Vancouver is California, and she's certainly softened
my sharp edges, which is abenefit in business, and she's
certainly softened my sharpedges, which is a benefit in
business.
MC (01:06):
You know, I got to say people often ask me and I don't
know if it's the Italian in meor what, but people often ask.
You know, you moved to Dallas.
What's the first thing younotice?
And I said there's no good food.
And I mean, coming fromVancouver, you could walk down I
don't care what street.
You could walk down the streetcovering your eyes and take a
(01:27):
right or a left turn and a 50-50chance you will be in a
delicious Asian cuisine,european, it doesn't matter.
I mean a good gastropub here.
It's like you go to a pizzaplace here and they're like do
you want the brisket pizza?
And I'm like, how dare you putbrisket on a pizza?
(01:50):
But I miss it.
So you'll have to look out thewindow and give my praises to
the motherland.
I want to talk to you about thisbecause this is fascinating
territory.
I can't recall anybody in ourentire guest catalog who has
joined the show to talk M&A.
And I want to kick things offthis way, arthur, if I can.
(02:12):
Years ago on the show, probablyjust as we were heading into
the pandemic, in fact I made aprediction and my prediction was
that single point.
Dealers were positioning tomaybe pick up another point,
maybe one or two other stores intheir area, so that they were
(02:33):
positioned to be acquired by themiddle sized groups that maybe
got five to seven or 10 to 12dealers and that those mid-tier
dealer groups were beingpositioned for the I don't know
the Canada Ones or the Delaurisor the Lithias in America or the
Auto Nations to come in and buythem, almost like a I don't
(02:55):
know a Russian nesting doll ofM&A activity.
I'm curious from your vantagepoint, working and having such a
vast history in this space.
From your vantage point,working and having such a vast
history in this space, what areyou seeing happen?
Is there any validation to thatprediction or am I just a
failed Nostradamus?
Arthur (03:12):
You're not failed.
I like to call it steps ratherthan nesting dolls, but that's
essentially it.
It's the steps of growth.
So if you've got one deal, youwant to grow to two or three to
be more attractive to the guythat has 12 or 18.
If you've got 12 or 18, youwant to grow to 35 to 40, to
(03:33):
either be a large acquisitionfrom one of the larger groups
here or from a group in the US,or simply continue to build.
So it's all about stages andthere's varying degrees of
stages in between.
So, for example, somebody thatowned seven stores would be
interested in somebody that'sselling two stores or three
stores, because it's apercentage wise growth, and so
(03:56):
that still holds true.
Now.
I think that people are being alot more discerning on what
they buy from a strategiclocation, volume and financial
standpoint rather than pre-COVID.
Pre-covid was just where is it?
How much can I buy it for?
MC (04:14):
Got it.
It was a little moreflexibility.
It sounds like pre-COVID.
Arthur (04:18):
Well, money was also free back then.
Well, not free, but interestrate wise, I call it free.
MC (04:25):
I mean based on those interest rates and how some
people were getting locked infor tremendous terms.
I would consider that freemoney.
As a business person, I'd takeit all day long.
What's happening now in themarket from an M&A perspective,
I know on the backside of whatyou just said here, we have now
less flexibility, higherinterest rates, bigger terms,
(04:47):
more potential risk orperception of risk.
When it comes to yourexperience, what are some of the
common questions now thatyou're being asked from your
portfolio?
Arthur (05:01):
Well, it always boils down to three questions when is
it?
So they're strategically lookinguse ratio don't talk to me,
(05:30):
because they want that volume of1,000 units and they want the
upside being an underperforming,pre-owned operation.
So it's just about where thegoalposts are for everyone,
whereas you know, there's aclient of mine in Western Canada
that has been sitting on thesidelines with a lot of dry
powder that is prepared to, youknow, be a lot more aggressive
(05:53):
because he feels that it's agood buying time.
So it really depends on who,where the location is, what the
volume is and how that fits intotheir model.
So the last point I didn't talkabout was profitability.
A lot of times when you'redealing with somebody that has
three, four or five stores, theyjust take your top line numbers
and input it into what theirreturn on investment percentages
(06:16):
would be.
So they would know if they ranthe store under their practices,
how much should they make Right.
And that's sometimes where youget the disconnection between
somebody paying a huge multiplebut they feel after they've
turned their store aroundthey're not.
So it boils down to location,volume and return on investment.
MC (06:37):
What are some common and you don't have to go into too much
detail or divulge classifiedinformation.
But from a general perspective,let's say you are the dealer
who is looking to sell.
What are some mistakes that oneshould avoid when approaching
an M&A conversation?
Arthur (06:57):
Well, I think that for me I can't speak for everyone
else, but for me I would lookfor somebody that's going to be
a partner with me in thisjourney that is more divulgent
in information.
So, for example, you know, Ihave a client that really hasn't
done any estate planning and inorder to, you know, minimize
(07:23):
tax and maximize you know,maximize net after-tax proceeds,
they need to do a little estateplanning.
And I could have gone throughthe process, no problem, and
said just talk to youraccountants after the deal is
done.
But I said, talk to youraccountants ahead of time and
that's delayed the sale processtwo years because we need 24
months and one day to makecorporate changes on capital
(07:45):
gains.
But having somebody that'sprepared to tell me what I need
to know and wait for the deal issomebody I want to do business
with.
MC (07:54):
How did you even get into this?
Arthur (07:56):
It was by accident.
I was in retail for 17 or 18years.
I think.
Everything to everybody in lifehappens by accident.
That's my philosophy.
But I knew a large dealer groupwhen I was still in Toronto.
Somebody asked me for a favor.
I did an introduction and I gota nice referral check and I
thought, wow, this is a business.
And that's where it kind ofstarted in 2013, I think 2014,
(08:22):
somewhere there.
MC (08:22):
And I mean, because this is such a I mean Gosh, you have to
be so financially literate intax code and accounting
practices and business practices.
I mean, so you go, wait aminute, there's a business here.
(08:42):
What's the next big leap thatyou take into this thing?
Did you have a background infinance?
Were you always good withnumbers?
I mean, what is in Arthur's DNAthat says, oh, this is
something I can do.
Arthur (08:57):
That's a really easy question to answer.
I almost feel like it's a layup.
Okay, tell me 17 years in retailautomotive.
I ran a store.
I've got the bug.
I've been to NADA DealerAcademy.
I'm a graduate of the NationalAutomobile Dealer Association
Dealer Academy.
I always thought I wanted tobuy a deal and life just gave me
(09:18):
a left-hand turn, which I'm notdisappointed about.
When you're in retail you learnto sniff out the right deals
here and there.
So it just dawned on me and youlook, today there's a lot more
players in the market, soobviously everybody's figured it
out.
MC (09:35):
I'm convinced, you know, having also stumbled into
automotive by accident, I callit the backwards trust fall.
You know, we all kind of at onepoint did a backwards trust
fall and somebody caught us.
But what inspires me abouthearing that?
Yes, kind of a layup.
But I'm convinced that there'sno other industry on this planet
(09:57):
that can take anybody frommultiple walks of life, multiple
walks of experience, give themsuch intense training if they
desire it and if they're willingto put the work in and come out
of it with something that Ithink you mentioned ROI earlier.
With such a surmountable levelof ROI on the backside of what
(10:20):
is possible, I mean you look, inthe auto industry you can be a
one-man show with five clientsmaking 20 grand a month.
You can be a multi-billiondollar company or multiples on
multiples of billions of dollarsa company and everything in
between.
It's possible inside of thisindustry and I'm just so
(10:42):
fascinated by that.
So when you say, well, yeah, 17years in retail automotive and
I'm like and then look whathappens a lucrative career in
M&A.
At what point during the 17years?
I mean, you got the affiliatecheck, but were you starting to
lean in to the industry in adifferent way, like outside of
retail, where you're starting topay attention to this activity
early somewhere in that 17 years.
(11:03):
Hey, does your marketing agencysuck?
Listen, before we hop back intothis episode.
I know you know me as the hostof the Dealer Playbook, but did
you also know that I'm the CEOof FlexDealer, an agency that's
helping dealers capture betterquality leads from local SEO and
hyper-targeted ads that convert?
So if you want to sell morecars and finally have a partner
(11:26):
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flexdealercom.
Arthur (11:34):
Let's hop back into this episode.
No, as I said, it was kind ofby accident.
What I did realize when Ipivoted was that the capital
expenditure for being a dealerprincipal was going up and up,
and just the amount of facilityupdates it was becoming very
capital intensive.
And I had many opportunities tobe a dealer and decided against
(11:58):
it for more than one or tworeasons.
But the biggest reason that hadme pivot out was the amount of
capital it needed to be abusiness owner, a dealer
principal Interesting.
MC (12:10):
I was going to ask you about this because there seems to be
a divide here.
Some people say you got to getout of the car business.
We don't know what's happening.
There's volatility, there's whoknows what's going to happen
electrification and OEMs takingover and Amazon and all of these
things.
And then there's the other sideof it where I see individuals
(12:33):
who are leaning in.
I know several individuals whoare like you know what.
This seems like a good time tobuy dealerships.
Obviously, I think it's safe tosay you're seeing both sides of
that coin.
In a 2025 world.
What are the reasons you'reseeing from your client base of
why they're wanting to lean in?
(12:54):
I mean, we've talked about someof the things they're looking
for, but what is it about themthat sees hope and optimism in
the industry, where maybe theflip side of the coin people are
like, oh, this industry is notgoing to exist the way it exists
in the next 30 years.
Arthur (13:07):
Well, I think that no industry is going to exist the
way it exists in 30 years.
I mean, you look at, look atfuture shop.
You know what's that?
You know I can go to best buywithout even going to best buy.
I think buying the car andbuying a home or those are
probably the two largestinvestments in your lifetime for
(13:28):
most, unless you buy a cardealership.
I think that I don't think.
I know the car business is agood business.
It's resilient, it'll pivot,it'll adapt, it's it's really
been well served for a lot ofpeople.
I think it's a great businessand I think, for the right
people, um, that it's going tomake a lot of people.
(13:49):
It's going to make a lot ofpeople.
It's going to serve a lot ofpeople a good life, both
financially and fulfilling.
It's very fulfilling For thosethat think it's a bad time.
You know that's the crystalball thing when should I buy
into the stock market?
So you've always got thecontrarians always.
But deep down in my bones, carbusiness is a good business.
(14:10):
It'll probably provide lots offamilies with lots of income.
You know small business owners,entrepreneurs, they'll figure
it out, they'll pivot.
We were worried about what youknow manufacturers selling cars
when hyundai did the wholegenesis thing.
Well, you know, we're stillselling cars retail.
We were worried about peoplebuying cars online when carvana
(14:31):
had the you know the big pylonswith the cars inside the vending
machine things.
You still have car dealerships.
I think the cost of real estateis going to have to make Metro
centers rethink how they do it,as the downtown automotive group
has done in Toronto and thePatterson group has done out
here in Vancouver and a lot ofUS groups where they incorporate
(14:52):
dealerships into the bottom ofhigh rises and that's strictly
from.
Again, it boils down to returnon investment and dealing with
high real estate prices.
But the car business is a goodbusiness.
I think anybody that wants tobe in it should be proud.
I'm proud to be part of it andfor me it just wasn't in the
cards, it didn't feel right tobe a dealer.
(15:13):
But those that are pessimisticeverybody's entitled to their
own opinion.
I just don't see it yeah.
MC (15:19):
I'm like a half and half.
So a few years ago I wasmeeting with a dealer partner,
client of ours, and I said youknow, I'm, I think I'm
interested in I don't knowbuying into a dealership.
What do you recommend?
He says be prepared to live inthe crappiest town you can
imagine, because those areusually the stores you can get
(15:40):
for cheaper.
And of course we were innorthern Saskatchewan, right,
and I'll admit, in that moment Irealized my level of
willingness was next to no,because my instant reaction was
I don't know if I could live innorthern Saskatchewan or
something like that, but are youseeing much activity by way of
(16:02):
people getting in and buyingtheir first point yeah, I see a
lot of dealer groups that arestaking minority partners for 15
to 20 to 25%.
Arthur (16:13):
And those are the operators good operators that
are looking to grow and justdon't have the capital.
And you know, for some of themI know a deal that we're in the
middle of right now.
He wants to be in NorthernSaskatchewan.
Oh, Because he knows he cansell lots of cars, he can make a
good living and, moreimportantly for him, he's got a
(16:35):
good quality of life.
It's not like working in a bigcity.
So it's really different folksfor different strokes.
Like you can sell me on thatprobably as much as they could
sell you on that.
I would need to be in a majorcenter, but yeah, I still think
people are out there buying thenice thing about northern
saskatchewan is.
(16:55):
They've had drone grocerydelivery forever, but the drones
are called mosquitoes well,isn't the saying out there and I
can say this because my wife'sfrom saskatchewan that if you
want to watch your dog run away,it'll take four days because
it's so flat?
MC (17:08):
yeah you can stand on a baseball cap and see four days
because it's so flat.
You can stand on a baseball capand see four days away.
It's so flat.
Isn't that interesting what youknow?
For those that are listening,I'm curious what would you
advise an individual who's likeman?
That sounds appealing to me.
I'd love an opportunity to getin, you know, as a minority
partner.
What do they need to haveprepared in order to be in a
(17:31):
position to secure that?
I think a lot of people wonderthat there's a lot of ambiguity.
It's like do I need, is it assimple as tax returns?
What do I need to show to be inthe right position to approach
those opportunities and say, yes, I'd love the shot at being a
minority partner in a dealership.
Arthur (17:53):
I think it comes down to research and culture.
I think you need to research orat least I would research
dealer groups that have theminority model in place and the
most important thing is culture.
Any deal you do, in my belief,is a good deal of everybody's
happy six months down the line.
So there's some groups thathave a certain culture, some
(18:15):
groups that have a differentculture, and I think it's what
culture is most aligned with youand your home life and your
life.
Because you don't want to, youwant all that in harmony.
So if you do enough researchand you join a dealer group as
an operator and there'ssynergies there and the culture
(18:38):
is right, I think all you I knowall you really need to do is
outperform, prove your value,show up to the table and they'll
help you through everythingelse.
It's not something that you'regoing to spin the bottle and say
I'm going to partner with thisdealer group because you don't
know what you're getting into.
It's like getting married.
MC (18:56):
Yeah, right, and I love how you're.
You bring up culture.
I mean, oftentimes we hearculture discussed so much in our
industry, especially in thelast two to three years, I feel
like that topic has risen to thesurface.
Here you are now expressing avery real, tangible,
quantifiable reason why cultureis important, where I think a
(19:19):
lot of people have had achallenge quantifying culture.
Here you have no, because it'snot just your lifestyle, it's a
partnership, and how well thatpartnership goes impacts
profitability and the otherfacets of life.
You might be one of the fewpeople, admittedly I've
discussed, that are in thefinancial world, business world,
(19:40):
who are leading the discussionwith the culture piece and the
lifestyle piece.
What does that mean for you?
How do you make that real forothers to understand that your
life has to be in harmony?
Arthur (19:55):
Well, you can only lead a horse to water.
You can't make a drink, but youreally need to, as somebody
that's doing this, identify youknow, best way I can give you an
example is, when I speakculture, I speak about the
management culture.
If I'm all about having thecustomer appreciation day on
(20:21):
Saturdays, where not only do Ihave a customer appreciation day
but I have a female workshopfor ladies that want to, with a
female tech that want to learn alittle bit more about a car,
and my management culture onlyreally cares about how many cars
I sell, that's a disconnect.
When I talk culture, right,right, and the other way I can
sort of phrase it is you know,whenever we're looking to help
(20:44):
somebody with a capital raiseand to buy a dealership or to
inject capital into a dealership, we always want to look for
what's called friendly money.
Friendly money understands thebusiness and understands that
you're going to have hills andvalleys, you're going to have
bad months, going to have goodmonths it's not what you did
last year, divided by 12,because there is something
called January and there issomething called August and
(21:08):
friendly money understands thatno one's buying.
Well, I shouldn't say no, butcar sales are down in January
and you know cause?
Everybody's looking at theirvisa bill saying maybe I'll do
it in February, march and inSeptember everyone's at the lake
, or, sorry, august, everyone'sat the lake.
So to have a partner thatdoesn't share the same culture,
(21:28):
that understands those hills andvalleys and the seasonality of
the business is sometimes tough,because they're just taking
last year, dividing it by 12 andsaying you're down when in May
and June, you'll be up year todate, july 1st, but possibly at
the end of April you're notapril, you're not.
MC (21:52):
I wrote down friendly money and I put it in quotation marks
because I feel like that couldapply to so many different
business, to actually allbusinesses it could relate to,
and especially I mean knowing asan agency owner.
Boy oh boy, is it so mucheasier to work with someone when
it's friendly money, where youaligned, where you share the
same values, where you, to yourpoint, each of you, can exhibit
(22:15):
the faculties enough to rememberthat people move in patterns
and seasons and a freak up inJanuary doesn't mean all January
, like you can just bank on thator that, you should just expect
it always to be better than itwas last year.
Or you know, we talked pre-showa little bit about tariffs and
the impact they might have onconsumer trust or interest rates
or insert any sort of variablehere, and boy does friendly
(22:39):
money make the difference.
Arthur (22:41):
Yeah, you know.
A great example is I had ameeting yesterday at a hotel
here and the hotel was quiteempty in the lobby where we met
and well, you know it was sunnyhere, that's why it was slow in
the lobby.
Aka, friendly money.
They understand the environmentright.
So I agree with you.
MC (22:59):
It can be applied to any industry, in my opinion yeah,
nobody is going to mess withsunny in vancouver, you know,
don't even ask questions.
We know where everyone is.
They're outside getting theirfix of vitamin D.
Arthur (23:13):
Well, it was really a shrug of the shoulders and he
went eh, it's sunny out.
He walked away.
MC (23:21):
That's awesome.
This has been such a delight.
I've learned so much.
I've taken about four pages ofnotes.
Arthur, how can those listeningand watching as we wind down
get in touch with you andconnect?
Arthur (23:31):
The two best places are you can find me on LinkedIn or
you can find me on my website.
So I can ramble off everything,but it's probably too many
letters and numbers.
But LinkedIn and that websitewould be best Great.
MC (23:47):
Well, for those listening watching, we're going to link up
to Arthur's website in the shownotes so you can connect there
as well as put a link to hisLinkedIn.
Reach out to him.
There is a lot of reallyinteresting things to consider,
especially if you're thinkingabout hey, maybe I'm in a
position where I've I'm inretail, but I would love a shot
at ownership.
He's the guy you want to askquestions to and, of course, if
(24:07):
you're looking to acquire morestores and merge, he is the man
you need to be looking for,arthur.
Thank you so much for joiningme on the dealer playbook
podcast.
Arthur (24:16):
Thank you for having me.
MC (24:17):
Hey, thanks for listening to the dealer playbook podcast.
If you enjoyed tuning in,please subscribe, share and hit
that like button.
You can also join us and theDPB community on social media.
Check back next week for a newdealer playbook episode.
Thanks so much for joining.
This episode is brought to you by FlexDealer.
Hey auto industry.
Welcome to this episode of theDealer Playbook Podcast.
We're going to be talking allthings mergers and acquisitions.
(00:22):
Stay tuned.
Today, my guest is Arthur JMajerian.
That is a power name.
I am so delighted to have youon the Dealer Playbook, sir.
Thank you for having me.
We learned pre-show that wehail from the same part of
Canada.
Arthur (00:37):
Correct.
Originally born in Toronto,though my wife transplanted me
to Vancouver.
MC (00:45):
So she's the voice of reason .
Got it, okay.
Okay, and I mean, how do you?
They're so similar and sodifferent at the same time.
Arthur (00:51):
You know, I'd like to say that it's tempered me quite
a bit.
I'd like to say, you know,think of Toronto, like New York
City and Vancouver is California, and she's certainly softened
my sharp edges, which is abenefit in business, and she's
certainly softened my sharpedges, which is a benefit in
business.
MC (01:06):
You know, I got to say people often ask me and I don't
know if it's the Italian in meor what, but people often ask.
You know, you moved to Dallas.
What's the first thing younotice?
And I said there's no good food.
And I mean, coming fromVancouver, you could walk down I
don't care what street.
You could walk down the streetcovering your eyes and take a
(01:27):
right or a left turn and a 50-50chance you will be in a
delicious Asian cuisine,european, it doesn't matter.
I mean a good gastropub here.
It's like you go to a pizzaplace here and they're like do
you want the brisket pizza?
And I'm like, how dare you putbrisket on a pizza?
(01:50):
But I miss it.
So you'll have to look out thewindow and give my praises to
the motherland.
I want to talk to you about thisbecause this is fascinating
territory.
I can't recall anybody in ourentire guest catalog who has
joined the show to talk M&A.
And I want to kick things offthis way, arthur, if I can.
(02:12):
Years ago on the show, probablyjust as we were heading into
the pandemic, in fact I made aprediction and my prediction was
that single point.
Dealers were positioning tomaybe pick up another point,
maybe one or two other stores intheir area, so that they were
(02:33):
positioned to be acquired by themiddle sized groups that maybe
got five to seven or 10 to 12dealers and that those mid-tier
dealer groups were beingpositioned for the I don't know
the Canada Ones or the Delaurisor the Lithias in America or the
Auto Nations to come in and buythem, almost like a I don't
(02:55):
know a Russian nesting doll ofM&A activity.
I'm curious from your vantagepoint, working and having such a
vast history in this space.
From your vantage point,working and having such a vast
history in this space, what areyou seeing happen?
Is there any validation to thatprediction or am I just a
failed Nostradamus?
Arthur (03:12):
You're not failed.
I like to call it steps ratherthan nesting dolls, but that's
essentially it.
It's the steps of growth.
So if you've got one deal, youwant to grow to two or three to
be more attractive to the guythat has 12 or 18.
If you've got 12 or 18, youwant to grow to 35 to 40, to
(03:33):
either be a large acquisitionfrom one of the larger groups
here or from a group in the US,or simply continue to build.
So it's all about stages andthere's varying degrees of
stages in between.
So, for example, somebody thatowned seven stores would be
interested in somebody that'sselling two stores or three
stores, because it's apercentage wise growth, and so
(03:56):
that still holds true.
Now.
I think that people are being alot more discerning on what
they buy from a strategiclocation, volume and financial
standpoint rather than pre-COVID.
Pre-covid was just where is it?
How much can I buy it for?
MC (04:14):
Got it.
It was a little moreflexibility.
It sounds like pre-COVID.
Arthur (04:18):
Well, money was also free back then.
Well, not free, but interestrate wise, I call it free.
MC (04:25):
I mean based on those interest rates and how some
people were getting locked infor tremendous terms.
I would consider that freemoney.
As a business person, I'd takeit all day long.
What's happening now in themarket from an M&A perspective,
I know on the backside of whatyou just said here, we have now
less flexibility, higherinterest rates, bigger terms,
(04:47):
more potential risk orperception of risk.
When it comes to yourexperience, what are some of the
common questions now thatyou're being asked from your
portfolio?
Arthur (05:01):
Well, it always boils down to three questions when is
it?
So they're strategically lookinguse ratio don't talk to me,
(05:30):
because they want that volume of1,000 units and they want the
upside being an underperforming,pre-owned operation.
So it's just about where thegoalposts are for everyone,
whereas you know, there's aclient of mine in Western Canada
that has been sitting on thesidelines with a lot of dry
powder that is prepared to, youknow, be a lot more aggressive
(05:53):
because he feels that it's agood buying time.
So it really depends on who,where the location is, what the
volume is and how that fits intotheir model.
So the last point I didn't talkabout was profitability.
A lot of times when you'redealing with somebody that has
three, four or five stores, theyjust take your top line numbers
and input it into what theirreturn on investment percentages
(06:16):
would be.
So they would know if they ranthe store under their practices,
how much should they make Right.
And that's sometimes where youget the disconnection between
somebody paying a huge multiplebut they feel after they've
turned their store aroundthey're not.
So it boils down to location,volume and return on investment.
MC (06:37):
What are some common and you don't have to go into too much
detail or divulge classifiedinformation.
But from a general perspective,let's say you are the dealer
who is looking to sell.
What are some mistakes that oneshould avoid when approaching
an M&A conversation?
Arthur (06:57):
Well, I think that for me I can't speak for everyone
else, but for me I would lookfor somebody that's going to be
a partner with me in thisjourney that is more divulgent
in information.
So, for example, you know, Ihave a client that really hasn't
done any estate planning and inorder to, you know, minimize
(07:23):
tax and maximize you know,maximize net after-tax proceeds,
they need to do a little estateplanning.
And I could have gone throughthe process, no problem, and
said just talk to youraccountants after the deal is
done.
But I said, talk to youraccountants ahead of time and
that's delayed the sale processtwo years because we need 24
months and one day to makecorporate changes on capital
(07:45):
gains.
But having somebody that'sprepared to tell me what I need
to know and wait for the deal issomebody I want to do business
with.
MC (07:54):
How did you even get into this?
Arthur (07:56):
It was by accident.
I was in retail for 17 or 18years.
I think.
Everything to everybody in lifehappens by accident.
That's my philosophy.
But I knew a large dealer groupwhen I was still in Toronto.
Somebody asked me for a favor.
I did an introduction and I gota nice referral check and I
thought, wow, this is a business.
And that's where it kind ofstarted in 2013, I think 2014,
(08:22):
somewhere there.
MC (08:22):
And I mean, because this is such a I mean Gosh, you have to
be so financially literate intax code and accounting
practices and business practices.
I mean, so you go, wait aminute, there's a business here.
(08:42):
What's the next big leap thatyou take into this thing?
Did you have a background infinance?
Were you always good withnumbers?
I mean, what is in Arthur's DNAthat says, oh, this is
something I can do.
Arthur (08:57):
That's a really easy question to answer.
I almost feel like it's a layup.
Okay, tell me 17 years in retailautomotive.
I ran a store.
I've got the bug.
I've been to NADA DealerAcademy.
I'm a graduate of the NationalAutomobile Dealer Association
Dealer Academy.
I always thought I wanted tobuy a deal and life just gave me
(09:18):
a left-hand turn, which I'm notdisappointed about.
When you're in retail you learnto sniff out the right deals
here and there.
So it just dawned on me and youlook, today there's a lot more
players in the market, soobviously everybody's figured it
out.
MC (09:35):
I'm convinced, you know, having also stumbled into
automotive by accident, I callit the backwards trust fall.
You know, we all kind of at onepoint did a backwards trust
fall and somebody caught us.
But what inspires me abouthearing that?
Yes, kind of a layup.
But I'm convinced that there'sno other industry on this planet
(09:57):
that can take anybody frommultiple walks of life, multiple
walks of experience, give themsuch intense training if they
desire it and if they're willingto put the work in and come out
of it with something that Ithink you mentioned ROI earlier.
With such a surmountable levelof ROI on the backside of what
(10:20):
is possible, I mean you look, inthe auto industry you can be a
one-man show with five clientsmaking 20 grand a month.
You can be a multi-billiondollar company or multiples on
multiples of billions of dollarsa company and everything in
between.
It's possible inside of thisindustry and I'm just so
(10:42):
fascinated by that.
So when you say, well, yeah, 17years in retail automotive and
I'm like and then look whathappens a lucrative career in
M&A.
At what point during the 17years?
I mean, you got the affiliatecheck, but were you starting to
lean in to the industry in adifferent way, like outside of
retail, where you're starting topay attention to this activity
early somewhere in that 17 years.
(11:03):
Hey, does your marketing agencysuck?
Listen, before we hop back intothis episode.
I know you know me as the hostof the Dealer Playbook, but did
you also know that I'm the CEOof FlexDealer, an agency that's
helping dealers capture betterquality leads from local SEO and
hyper-targeted ads that convert?
So if you want to sell morecars and finally have a partner
(11:26):
that's in it with you, thatdoesn't suck, visit
flexdealercom.
Arthur (11:34):
Let's hop back into this episode.
No, as I said, it was kind ofby accident.
What I did realize when Ipivoted was that the capital
expenditure for being a dealerprincipal was going up and up,
and just the amount of facilityupdates it was becoming very
capital intensive.
And I had many opportunities tobe a dealer and decided against
(11:58):
it for more than one or tworeasons.
But the biggest reason that hadme pivot out was the amount of
capital it needed to be abusiness owner, a dealer
principal Interesting.
MC (12:10):
I was going to ask you about this because there seems to be
a divide here.
Some people say you got to getout of the car business.
We don't know what's happening.
There's volatility, there's whoknows what's going to happen
electrification and OEMs takingover and Amazon and all of these
things.
And then there's the other sideof it where I see individuals
(12:33):
who are leaning in.
I know several individuals whoare like you know what.
This seems like a good time tobuy dealerships.
Obviously, I think it's safe tosay you're seeing both sides of
that coin.
In a 2025 world.
What are the reasons you'reseeing from your client base of
why they're wanting to lean in?
(12:54):
I mean, we've talked about someof the things they're looking
for, but what is it about themthat sees hope and optimism in
the industry, where maybe theflip side of the coin people are
like, oh, this industry is notgoing to exist the way it exists
in the next 30 years.
Arthur (13:07):
Well, I think that no industry is going to exist the
way it exists in 30 years.
I mean, you look at, look atfuture shop.
You know what's that?
You know I can go to best buywithout even going to best buy.
I think buying the car andbuying a home or those are
probably the two largestinvestments in your lifetime for
(13:28):
most, unless you buy a cardealership.
I think that I don't think.
I know the car business is agood business.
It's resilient, it'll pivot,it'll adapt, it's it's really
been well served for a lot ofpeople.
I think it's a great businessand I think, for the right
people, um, that it's going tomake a lot of people.
(13:49):
It's going to make a lot ofpeople.
It's going to serve a lot ofpeople a good life, both
financially and fulfilling.
It's very fulfilling For thosethat think it's a bad time.
You know that's the crystalball thing when should I buy
into the stock market?
So you've always got thecontrarians always.
But deep down in my bones, carbusiness is a good business.
(14:10):
It'll probably provide lots offamilies with lots of income.
You know small business owners,entrepreneurs, they'll figure
it out, they'll pivot.
We were worried about what youknow manufacturers selling cars
when hyundai did the wholegenesis thing.
Well, you know, we're stillselling cars retail.
We were worried about peoplebuying cars online when carvana
(14:31):
had the you know the big pylonswith the cars inside the vending
machine things.
You still have car dealerships.
I think the cost of real estateis going to have to make Metro
centers rethink how they do it,as the downtown automotive group
has done in Toronto and thePatterson group has done out
here in Vancouver and a lot ofUS groups where they incorporate
(14:52):
dealerships into the bottom ofhigh rises and that's strictly
from.
Again, it boils down to returnon investment and dealing with
high real estate prices.
But the car business is a goodbusiness.
I think anybody that wants tobe in it should be proud.
I'm proud to be part of it andfor me it just wasn't in the
cards, it didn't feel right tobe a dealer.
(15:13):
But those that are pessimisticeverybody's entitled to their
own opinion.
I just don't see it yeah.
MC (15:19):
I'm like a half and half.
So a few years ago I wasmeeting with a dealer partner,
client of ours, and I said youknow, I'm, I think I'm
interested in I don't knowbuying into a dealership.
What do you recommend?
He says be prepared to live inthe crappiest town you can
imagine, because those areusually the stores you can get
(15:40):
for cheaper.
And of course we were innorthern Saskatchewan, right,
and I'll admit, in that moment Irealized my level of
willingness was next to no,because my instant reaction was
I don't know if I could live innorthern Saskatchewan or
something like that, but are youseeing much activity by way of
(16:02):
people getting in and buyingtheir first point yeah, I see a
lot of dealer groups that arestaking minority partners for 15
to 20 to 25%.
Arthur (16:13):
And those are the operators good operators that
are looking to grow and justdon't have the capital.
And you know, for some of themI know a deal that we're in the
middle of right now.
He wants to be in NorthernSaskatchewan.
Oh, Because he knows he cansell lots of cars, he can make a
good living and, moreimportantly for him, he's got a
(16:35):
good quality of life.
It's not like working in a bigcity.
So it's really different folksfor different strokes.
Like you can sell me on thatprobably as much as they could
sell you on that.
I would need to be in a majorcenter, but yeah, I still think
people are out there buying thenice thing about northern
saskatchewan is.
(16:55):
They've had drone grocerydelivery forever, but the drones
are called mosquitoes well,isn't the saying out there and I
can say this because my wife'sfrom saskatchewan that if you
want to watch your dog run away,it'll take four days because
it's so flat?
MC (17:08):
yeah you can stand on a baseball cap and see four days
because it's so flat.
You can stand on a baseball capand see four days away.
It's so flat.
Isn't that interesting what youknow?
For those that are listening,I'm curious what would you
advise an individual who's likeman?
That sounds appealing to me.
I'd love an opportunity to getin, you know, as a minority
partner.
What do they need to haveprepared in order to be in a
(17:31):
position to secure that?
I think a lot of people wonderthat there's a lot of ambiguity.
It's like do I need, is it assimple as tax returns?
What do I need to show to be inthe right position to approach
those opportunities and say, yes, I'd love the shot at being a
minority partner in a dealership.
Arthur (17:53):
I think it comes down to research and culture.
I think you need to research orat least I would research
dealer groups that have theminority model in place and the
most important thing is culture.
Any deal you do, in my belief,is a good deal of everybody's
happy six months down the line.
So there's some groups thathave a certain culture, some
(18:15):
groups that have a differentculture, and I think it's what
culture is most aligned with youand your home life and your
life.
Because you don't want to, youwant all that in harmony.
So if you do enough researchand you join a dealer group as
an operator and there'ssynergies there and the culture
(18:38):
is right, I think all you I knowall you really need to do is
outperform, prove your value,show up to the table and they'll
help you through everythingelse.
It's not something that you'regoing to spin the bottle and say
I'm going to partner with thisdealer group because you don't
know what you're getting into.
It's like getting married.
MC (18:56):
Yeah, right, and I love how you're.
You bring up culture.
I mean, oftentimes we hearculture discussed so much in our
industry, especially in thelast two to three years, I feel
like that topic has risen to thesurface.
Here you are now expressing avery real, tangible,
quantifiable reason why cultureis important, where I think a
(19:19):
lot of people have had achallenge quantifying culture.
Here you have no, because it'snot just your lifestyle, it's a
partnership, and how well thatpartnership goes impacts
profitability and the otherfacets of life.
You might be one of the fewpeople, admittedly I've
discussed, that are in thefinancial world, business world,
(19:40):
who are leading the discussionwith the culture piece and the
lifestyle piece.
What does that mean for you?
How do you make that real forothers to understand that your
life has to be in harmony?
Arthur (19:55):
Well, you can only lead a horse to water.
You can't make a drink, but youreally need to, as somebody
that's doing this, identify youknow, best way I can give you an
example is, when I speakculture, I speak about the
management culture.
If I'm all about having thecustomer appreciation day on
(20:21):
Saturdays, where not only do Ihave a customer appreciation day
but I have a female workshopfor ladies that want to, with a
female tech that want to learn alittle bit more about a car,
and my management culture onlyreally cares about how many cars
I sell, that's a disconnect.
When I talk culture, right,right, and the other way I can
sort of phrase it is you know,whenever we're looking to help
(20:44):
somebody with a capital raiseand to buy a dealership or to
inject capital into a dealership, we always want to look for
what's called friendly money.
Friendly money understands thebusiness and understands that
you're going to have hills andvalleys, you're going to have
bad months, going to have goodmonths it's not what you did
last year, divided by 12,because there is something
called January and there issomething called August and
(21:08):
friendly money understands thatno one's buying.
Well, I shouldn't say no, butcar sales are down in January
and you know cause?
Everybody's looking at theirvisa bill saying maybe I'll do
it in February, march and inSeptember everyone's at the lake
, or, sorry, august, everyone'sat the lake.
So to have a partner thatdoesn't share the same culture,
(21:28):
that understands those hills andvalleys and the seasonality of
the business is sometimes tough,because they're just taking
last year, dividing it by 12 andsaying you're down when in May
and June, you'll be up year todate, july 1st, but possibly at
the end of April you're notapril, you're not.
MC (21:52):
I wrote down friendly money and I put it in quotation marks
because I feel like that couldapply to so many different
business, to actually allbusinesses it could relate to,
and especially I mean knowing asan agency owner.
Boy oh boy, is it so mucheasier to work with someone when
it's friendly money, where youaligned, where you share the
same values, where you, to yourpoint, each of you, can exhibit
(22:15):
the faculties enough to rememberthat people move in patterns
and seasons and a freak up inJanuary doesn't mean all January
, like you can just bank on thator that, you should just expect
it always to be better than itwas last year.
Or you know, we talked pre-showa little bit about tariffs and
the impact they might have onconsumer trust or interest rates
or insert any sort of variablehere, and boy does friendly
(22:39):
money make the difference.
Arthur (22:41):
Yeah, you know.
A great example is I had ameeting yesterday at a hotel
here and the hotel was quiteempty in the lobby where we met
and well, you know it was sunnyhere, that's why it was slow in
the lobby.
Aka, friendly money.
They understand the environmentright.
So I agree with you.
MC (22:59):
It can be applied to any industry, in my opinion yeah,
nobody is going to mess withsunny in vancouver, you know,
don't even ask questions.
We know where everyone is.
They're outside getting theirfix of vitamin D.
Arthur (23:13):
Well, it was really a shrug of the shoulders and he
went eh, it's sunny out.
He walked away.
MC (23:21):
That's awesome.
This has been such a delight.
I've learned so much.
I've taken about four pages ofnotes.
Arthur, how can those listeningand watching as we wind down
get in touch with you andconnect?
Arthur (23:31):
The two best places are you can find me on LinkedIn or
you can find me on my website.
So I can ramble off everything,but it's probably too many
letters and numbers.
But LinkedIn and that websitewould be best Great.
MC (23:47):
Well, for those listening watching, we're going to link up
to Arthur's website in the shownotes so you can connect there
as well as put a link to hisLinkedIn.
Reach out to him.
There is a lot of reallyinteresting things to consider,
especially if you're thinkingabout hey, maybe I'm in a
position where I've I'm inretail, but I would love a shot
at ownership.
He's the guy you want to askquestions to and, of course, if
(24:07):
you're looking to acquire morestores and merge, he is the man
you need to be looking for,arthur.
Thank you so much for joiningme on the dealer playbook
podcast.
Arthur (24:16):
Thank you for having me.
MC (24:17):
Hey, thanks for listening to the dealer playbook podcast.
If you enjoyed tuning in,please subscribe, share and hit
that like button.
You can also join us and theDPB community on social media.
Check back next week for a newdealer playbook episode.
Thanks so much for joining.
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