Post-merger integration in car dealerships: how to ensure a successful merger
Enterprise or entrepreneur succession
approximately 20% of all car dealerships in Germany were seeking a successor, equivalent to about 12,000 businesses. The number of succession arrangements has also increased in recent years, with around 6,000 dealerships being transferred annually.
The demand for successors is high in all regions of Germany. However, it is particularly pronounced in rural areas, where finding qualified successors can be challenging. The reasons for this search vary. In most cases, the current owner of the dealership is simply too old to continue running the business. In other cases, the owner's descendants are not interested in taking over.
Automotive manufacturers
Automotive manufacturers themselves often play a pivotal role in the consolidation of the automotive retail sector. For instance, the introduction of the agency model can contribute to diminishing the differentiation capabilities of smaller and medium-sized dealerships. Moreover, margin cuts increasingly exert pressure on dealership results. This could potentially render small and medium-sized dealerships non-competitive in the future.
Additionally, own retail is under scrutiny. Recent developments indicate that certain automobile manufacturers are withdrawing from the retail stage. The long-term impact of this trend on the number of brand-affiliated dealerships remains uncertain. Concurrently, manufacturers are actively encouraging collaborations between dealerships to leverage synergies and enhance collaboration efficiency.
Every beginning carries a spark of magic – the potential of an acquisition
An acquisition can present an opportunity for both companies to explore new markets, leverage synergies, or enhance economic resilience. However, Post Merger Integration (PMI) is a complex process that requires careful planning and execution.
What points must be considered for a successful PMI?
clear vision
What is the objective of the acquisition? Is it to strengthen market position, enter a new market segment, or leverage synergies?
Thorough planning
The PMI should be planned and executed in a timely and structured manner. This includes considering all relevant areas such as sales, after-sales, marketing, IT, logistics, and especially the human resources department.
good communication
Employees of both companies must be informed about the goals & process of the PMI. Acquisitions often fail due to lack of employee acceptance. Therefore, it's essential to ensure a sense of unity among the employees.
Measures for successful integration
- Early analysis of both companies:
This includes assessing strengths and weaknesses, business models, and corporate culture. - Benchmarking:
After analyzing both companies, strengths of the acquired dealership should be assessed. Best practices from the new company should inform integration-specific goals. - Development of integration-specific goals:
These goals should encompass the strategic objectives of the acquisition and concrete measures to achieve them. - Formation of a PMI team:
Consisting of representatives from both companies, this team should take responsibility for PMI implementation. - Conflict resolution support:
Acquisitions can lead to team conflicts due to differing corporate cultures and standards. Mediator assistance can facilitate a smooth transition and sustainable integration. - Workshops and training:
These help employees adapt to new structures and processes. - Regular communication with employees:
Staff should be kept informed of PMI progress consistently.
Conclusion
Post-merger integration is a crucial factor for the success of a business acquisition. Careful planning and execution of PMI can help leverage synergies, strengthen market position, and harmonize corporate culture.
