Purchase and Sale of Motor Vehicle Dealerships (Buy/Sell Agreement)

When considering a purchase or sale of a motor vehicle dealership (or a buy/sell agreement), dealers must take into consideration issues that are quite distinctive to the niche area of motor vehicle dealerships.

Transactions involving the purchase or sale of a motor vehicle dealership can sometimes involve issues that create delay, cause apprehension and threaten the transaction’s successful completion.

In some other cases, a buy/sell agreement may in fact be terminated.

The buy/sell agreement – a simple contract?

A buy/sell agreement for an automotive dealership does not just involve a simple contract drawn up by a suburban commercial solicitor. Dealers should seek legal expertise in the automotive sector to best protect their interests.

In our experience, an automotive dealer who is considering the sale or purchase of a dealership (whether in Sydney, regional NSW or elsewhere in Australia) must be wary of factors such as:

1. The distributor’s unreasonable failure to consent to the transfer of the Dealer Agreement.

2. The distributor’s unreasonable capital investment demands on a prospective purchaser. This may have a significant impact on the goodwill value of the motor vehicle dealership or it might ultimately threaten a sale.

3. There may be a significant delay waiting for consent from the distributor to transfer the Dealer Agreement to the prospective purchaser.

4. The distributor’s rejection of a prospective purchaser on the basis of its performance with the same brand at another location.

5. Non-renewal notices, rumours regarding termination or market leaks.

6. Problems reconciling the dealer’s statement of account with the distributor’s statement of account.

7. The distributor’s refusal to grant a prospective purchaser a new term / Dealer Agreement or provide a “letter of comfort”.

8. The distributor having a preferred purchaser in mind but not divulging that information to the dealer.

We recommend that dealers seek early legal advice in a buy/sell transaction to prevent “surprises” down the track and to ensure the smooth progression of the buy/sell transaction.

Why choose us?

Our experienced principal, Vinesh George and his team can offer complete transaction management, which includes strong project management skills, together with the effective drafting and negotiation of the buy/sell agreement.

Vinesh is currently the Company Secretary and Legal Counsel for the Australian Automotive Dealer Association (the AADA), which is the peak industry body in Australia representing new car dealers.

He has worked at top tier law practices in the area of automotive law. He has also worked in a number of automotive multinational corporations including Mercedes-Benz and Inchcape. Vinesh has also acted for some of the biggest family-owned and publicly owned dealership groups in Australia, as well as peak industry associations acting for motor vehicle dealers.

For these reasons, we have unparalleled experience and insight into the automotive industry.

Want to know more?

Our automotive services include special projects, advice on particular industry issues and “in-house” general advice on day to day matters affecting dealers.

 

Call us today on (02) 9150 6991 and speak to Vinesh for all your automotive legal needs.