That Chevy store was the first of 13 dealerships owned by Jane and Bill, her longtime business partner who was chairman of the National Automobile Dealers Association in 2015. On Feb. 1, the siblings’ 45-year business partnership drew closer to an end when they sold three of their four remaining dealerships to dealer and investor Jonathan Sobel.
They plan to sell their remaining store to a longtime employee.
Helping that next generation of dealers get started has been important to the Fox siblings, who don’t have children entering the business. But passing the torch proved more difficult than they expected as dealership valuations grew, making it tough for newcomers without deep pockets. In trying to transfer ownership of some of their remaining stores to two employees, the pair realized they needed to invest their own money to make it work.
“No matter how much their salary is, it’s almost impossible for [newcomers] to get the financing they need to be able to buy four smaller dealerships — in upstate New York, even,” Bill Fox told Automotive News.
So the siblings sold three stores to Sobel. Fox declined to share their price.
Bob May, one longtime Fox employee who’d been pursuing store ownership, decided to stay on as Sobel’s platform manager. Another longtime employee, Mike Carrow, plans to buy the remaining store.
It was much different in the 1970s when the Foxes got started and many automakers were expanding their dealer networks. Newcomers were plentiful in auto retailing and had few of the challenges contemporary dealers face, said Alan Haig, president of Haig Partners, a buy-sell advisory firm in Fort Lauderdale, Fla., that represented the Foxes in the sale.
While dealerships’ steady appreciation over the past 25 years helped owners such as the Foxes build wealth, it becomes a double-edged sword when longtime dealers want to sell to veteran employees. Selling to a general manager, for instance, had once been a time-honored way to exit the business while taking care of employees and giving a leg up to a loyal manager.
But nowadays, general managers typically don’t have the money needed to cover the cost of land and property, furniture, fixtures, equipment, used vehicle, parts and the blue sky premium buyers pay to cover a dealership’s intangible value — not to mention the cash required to run a store. Haig estimates the average price tag on the sale of a single dealership is now about $20 million. To be approved, the buyer needs at least $5 million in cash on hand, he added.