Case Study 4

Restore profitability and recapitalize dealership

Challenge

Minority partnership awarded two new points – same brand within the same market. Dealerships face management and market challenges
  • Partnership posts more than $2.5M in losses in first two years of operation
  • Owner differences create significant management issues
  • Relationship with OEM and Captive strained
  • Brand: Hyundai

Focus

Refocus management on market profitability and improved cashflows
  • Assist in amicable separation of Partnership and voluntary termination of one store
  • Repair relationship with OEM and Captive

Approach

Execute a financial restructuring with assistance from Captive
  • Reengineer F&I to increase profitability and obtain financing from F&I provider
  • Negotiate settlements with:

    • Former Floor Plan/Working Capital lender
    • State, relating to previous Sales Tax shortfall
    • Parties to class action employment suit

Results

Successfully recapitalized Dealership with $2.2M in separate financing
  • Refocused processes, resulting in dealership posting turn-around positive net income
  • Recruited new, professional staff
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