With the acquisition complete, the hard work of integrating the new business can truly begin. The best outcome may result from the acquirer having pre-planned what will happen within the dealership in stages over the coming weeks and months.

Mike Jones, chairman of ASE Global, which has been helping dealers with acquisitions and business improvement for decades, said: “It doesn’t all have to happen on day one.”

The most crucial aspects will be reassuring the workforce and ensuring the acquirer’s systems can provide the

management information needed from the new dealership so any short-term deterioration in performance can be identified.

Mark Traynor of HRC Law has advised Lookers on several transactions in the past. His advice for dealers is to have a team of experienced managers ready to be dropped into the new business from day one.

During due diligence, the acquirer should have identified whether it will be retaining the DMS and other support systems of the new dealership, or whether it will be bringing in its own DMS provider early in the integration phase.

If the new business was previously an owner-driven site, the workforce may be reassured by an extended handover period that keeps the figurehead in the business during the early weeks of transition. This could restrict the new owner’s control of the new business, however, and the buyer must also look out for a change in the figurehead’s mindset, which often emerges as they no longer “own” the business.   

“Change always brings huge levels of disruption. Staff will be nervous, particularly if going from a smaller site to a massive plc, so keeping the figurehead on board will help with that transition,” said Jones.

Due diligence will have also looked at the key performance drivers, such as marketing actions, lead management and conversions, and service plan sales. From these, the acquirer can see what operational measures are needed to address the issues that arise, and agree which are most important so that these can be concentrated on immediately.

“The skill is integrating what you want people to do into their daily lives, so it becomes routine rather than a hassle that falls away when their managers stop asking,” said Jones. Often it is necessary to bring in external coaches or experienced leaders from within the group to bring the staff along.

If there are employees who no longer suit the future of the business, HR support will be necessary for the acquirer to manage out the ones who won’t come round to the new way of working.

Keith Melling of Napthens law firm warned that a business and asset sale is subject to TUPE regulations, which transfer the staff to the acquirer and protect their existing employment terms and conditions, such as holiday entitlement, contractual bonus schemes and working hours.

Under TUPE, if the acquirer looks to change employment terms and conditions in connection with a transfer, it runs the risk of an employee rejecting it, claiming it is in breach of TUPE, resigning and claiming an automatic unfair dismissal. Specialist employment law advice is recommended.

“You have to give yourself enough time so it is far away enough to not be in connection to the transfer, but is part of an overhaul of the buyer’s business generic terms and conditions to look at harmonising them within the group,” said Melling.

TUPE regulations do not apply in a share sale. However, staff morale can be impacted by contract changes, so a consultation process is recommended.

David Kendrick at UHY Hacker Young said one of the most difficult integrations can be when an owner-driver running one site decides to take on a second, possibly an under-performing one at the request of his manufacturer partner. Kendrick said he has often seen such cases result in a deteriorating performance at the first site because the owner-driver is so focused on the turnaround of the new business that the original business no longer gets the same attention.

“He might have been making £1 million from one site, and now he’s got two sites making £500,000 each, so he’s no better off,” said Kendrick. Strategic planning can negate these challenges, whether it means developing or recruiting an experienced senior manager who can be trusted to take over the running of the original site ahead of the acquisition, or building relationships with the DMS provider or training provider ready for its integration.