The Dealer Playbook

Ep. 668 - Should You Buy a Dealership in 2025? with Arthur J Madjarian

• Michael Cirillo

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In this episode I’m joined by Arthur J. Madjarian, a guy who’s been neck-deep in retail automotive, pivoted into mergers & acquisitions, and now helps dealer groups grow, exit, and scale smart. If you’ve ever wondered how M&A works in the auto industry, or whether dealership ownership is still worth chasing in 2025, this is your episode.

Arthur talks about real-life strategy, timing, red flags to avoid, and why culture and “friendly money” might just be the most underrated forces in any deal.

We also dive into:

  • The real reasons why some people are leaning into dealership ownership right now (despite the noise)
  • Why smart buyers are more selective than ever—and what they’re actually looking for
  • The risks of skipping estate planning before a sale
  • What it takes to become a minority partner in a store, and how to prepare
  • The future of real estate in automotive retail and how it could change everything
  • Why culture fit isn’t just fluffy talk—it’s tied to profit and survival

If you’re thinking about expanding, selling, or even just getting into the business, Arthur gives the kind of candid insight that only comes from living it. 

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MC:

This episode is brought to you by FlexDealer. Hey auto industry. Welcome to this episode of the Dealer Playbook Podcast. We're going to be talking all things mergers and acquisitions. Stay tuned. Today, my guest is Arthur J Majerian. That is a power name. I am so delighted to have you on the Dealer Playbook, sir. Thank you for having me. We learned pre-show that we hail from the same part of Canada.

Arthur:

Correct. Originally born in Toronto, though my wife transplanted me to Vancouver.

MC:

So she's the voice of reason. Got it, okay. Okay, and I mean, how do you? They're so similar and so different at the same time.

Arthur:

You know, I'd like to say that it's tempered me quite a bit. I'd like to say, you know, think of Toronto, like New York City and Vancouver is California, and she's certainly softened my sharp edges, which is a benefit in business, and she's certainly softened my sharp edges, which is a benefit in business.

MC:

You know, I got to say people often ask me and I don't know if it's the Italian in me or what, but people often ask. You know, you moved to Dallas. What's the first thing you notice? And I said there's no good food. And I mean, coming from Vancouver, you could walk down I don't care what street. You could walk down the street covering your eyes and take a right or a left turn and a 50-50 chance you will be in a delicious Asian cuisine, european, it doesn't matter. I mean a good gastropub here. It's like you go to a pizza place here and they're like do you want the brisket pizza? And I'm like, how dare you put brisket on a pizza? But I miss it. So you'll have to look out the window and give my praises to the motherland.

MC:

I want to talk to you about this because this is fascinating territory.

MC:

I can't recall anybody in our entire guest catalog who has joined the show to talk M&A. And I want to kick things off this way, arthur, if I can. Years ago on the show, probably just as we were heading into the pandemic, in fact I made a prediction and my prediction was that single point. Dealers were positioning to maybe pick up another point, maybe one or two other stores in their area, so that they were positioned to be acquired by the middle sized groups that maybe got five to seven or 10 to 12 dealers and that those mid-tier dealer groups were being positioned for the I don't know the Canada Ones or the Delauris or the Lithias in America or the Auto Nations to come in and buy them, almost like a I don't know a Russian nesting doll of M&A activity. I'm curious from your vantage point, working and having such a vast history in this space. From your vantage point, working and having such a vast history in this space, what are you seeing happen? Is there any validation to that prediction or am I just a failed Nostradamus?

Arthur:

You're not failed. I like to call it steps rather than nesting dolls, but that's essentially it. It's the steps of growth. So if you've got one deal, you want to grow to two or three to be more attractive to the guy that has 12 or 18. If you've got 12 or 18, you want to grow to 35 to 40, to either be a large acquisition from one of the larger groups here or from a group in the US, or simply continue to build. So it's all about stages and there's varying degrees of stages in between. So, for example, somebody that owned seven stores would be interested in somebody that's selling two stores or three stores, because it's a percentage wise growth, and so that still holds true. Now. I think that people are being a lot more discerning on what they buy from a strategic location, volume and financial standpoint rather than pre-COVID. Pre-covid was just where is it? How much can I buy it for?

MC:

Got it. It was a little more flexibility. It sounds like pre-COVID.

Arthur:

Well, money was also free back then. Well, not free, but interest rate wise, I call it free.

MC:

I mean based on those interest rates and how some people were getting locked in for tremendous terms. I would consider that free money. As a business person, I'd take it all day long. What's happening now in the market from an M&A perspective, I know on the backside of what you just said here, we have now less flexibility, higher interest rates, bigger terms, more potential risk or perception of risk. When it comes to your experience, what are some of the common questions now that you're being asked from your portfolio?

Arthur:

Well, it always boils down to three questions when is it?

Arthur:

So they're strategically looking use ratio don't talk to me, because they want that volume of 1,000 units and they want the upside being an underperforming, pre-owned operation.

Arthur:

So it's just about where the goalposts are for everyone, whereas you know, there's a client of mine in Western Canada that has been sitting on the sidelines with a lot of dry powder that is prepared to, you know, be a lot more aggressive because he feels that it's a good buying time. So it really depends on who, where the location is, what the volume is and how that fits into their model. So the last point I didn't talk about was profitability. A lot of times when you're dealing with somebody that has three, four or five stores, they just take your top line numbers and input it into what their return on investment percentages would be. So they would know if they ran the store under their practices, how much should they make Right. And that's sometimes where you get the disconnection between somebody paying a huge multiple but they feel after they've turned their store around they're not. So it boils down to location, volume and return on investment.

MC:

What are some common and you don't have to go into too much detail or divulge classified information. But from a general perspective, let's say you are the dealer who is looking to sell. What are some mistakes that one should avoid when approaching an M&A conversation?

Arthur:

Well, I think that for me I can't speak for everyone else, but for me I would look for somebody that's going to be a partner with me in this journey that is more divulgent in information. So, for example, you know, I have a client that really hasn't done any estate planning and in order to, you know, minimize tax and maximize you know, maximize net after-tax proceeds, they need to do a little estate planning. And I could have gone through the process, no problem, and said just talk to your accountants after the deal is done. But I said, talk to your accountants ahead of time and that's delayed the sale process two years because we need 24 months and one day to make corporate changes on capital gains. But having somebody that's prepared to tell me what I need to know and wait for the deal is somebody I want to do business with.

MC:

How did you even get into this?

Arthur:

It was by accident. I was in retail for 17 or 18 years. I think. Everything to everybody in life happens by accident. That's my philosophy. But I knew a large dealer group when I was still in Toronto. Somebody asked me for a favor. I did an introduction and I got a nice referral check and I thought, wow, this is a business. And that's where it kind of started in 2013, I think 2014, somewhere there.

MC:

And I mean, because this is such a I mean Gosh, you have to be so financially literate in tax code and accounting practices and business practices. I mean, so you go, wait a minute, there's a business here. What's the next big leap that you take into this thing? Did you have a background in finance? Were you always good with numbers? I mean, what is in Arthur's DNA that says, oh, this is something I can do.

Arthur:

That's a really easy question to answer. I almost feel like it's a layup.

Arthur:

Okay, tell me 17 years in retail automotive. I ran a store. I've got the bug. I've been to NADA Dealer Academy. I'm a graduate of the National Automobile Dealer Association Dealer Academy. I always thought I wanted to buy a deal and life just gave me a left-hand turn, which I'm not disappointed about. When you're in retail you learn to sniff out the right deals here and there. So it just dawned on me and you look, today there's a lot more players in the market, so obviously everybody's figured it out.

MC:

I'm convinced, you know, having also stumbled into automotive by accident, I call it the backwards trust fall. You know, we all kind of at one point did a backwards trust fall and somebody caught us. But what inspires me about hearing that? Yes, kind of a layup. But I'm convinced that there's no other industry on this planet that can take anybody from multiple walks of life, multiple walks of experience, give them such intense training if they desire it and if they're willing to put the work in and come out of it with something that I think you mentioned ROI earlier. With such a surmountable level of ROI on the backside of what is possible, I mean you look, in the auto industry you can be a one-man show with five clients making 20 grand a month. You can be a multi-billion dollar company or multiples on multiples of billions of dollars a company and everything in between. It's possible inside of this industry and I'm just so fascinated by that.

MC:

So when you say, well, yeah, 17 years in retail automotive and I'm like and then look what happens a lucrative career in M&A. At what point during the 17 years? I mean, you got the affiliate check, but were you starting to lean in to the industry in a different way, like outside of retail, where you're starting to pay attention to this activity early somewhere in that 17 years. Hey, does your marketing agency suck? Listen, before we hop back into this episode. I know you know me as the host of the Dealer Playbook, but did you also know that I'm the CEO of FlexDealer, an agency that's helping dealers capture better quality leads from local SEO and hyper-targeted ads that convert? So if you want to sell more cars and finally have a partner that's in it with you, that doesn't suck, visit flexdealercom.

Arthur:

Let's hop back into this episode. No, as I said, it was kind of by accident. What I did realize when I pivoted was that the capital expenditure for being a dealer principal was going up and up, and just the amount of facility updates it was becoming very capital intensive. And I had many opportunities to be a dealer and decided against it for more than one or two reasons. But the biggest reason that had me pivot out was the amount of capital it needed to be a business owner, a dealer principal Interesting.

MC:

I was going to ask you about this because there seems to be a divide here. Some people say you got to get out of the car business. We don't know what's happening. There's volatility, there's who knows what's going to happen electrification and OEMs taking over and Amazon and all of these things. And then there's the other side of it where I see individuals who are leaning in. I know several individuals who are like you know what. This seems like a good time to buy dealerships. Obviously, I think it's safe to say you're seeing both sides of that coin. In a 2025 world. What are the reasons you're seeing from your client base of why they're wanting to lean in? I mean, we've talked about some of the things they're looking for, but what is it about them that sees hope and optimism in the industry, where maybe the flip side of the coin people are like, oh, this industry is not going to exist the way it exists in the next 30 years.

Arthur:

Well, I think that no industry is going to exist the way it exists in 30 years. I mean, you look at, look at future shop. You know what's that? You know I can go to best buy without even going to best buy. I think buying the car and buying a home or those are probably the two largest investments in your lifetime for most, unless you buy a car dealership. I think that I don't think.

Arthur:

I know the car business is a good business. It's resilient, it'll pivot, it'll adapt, it's it's really been well served for a lot of people. I think it's a great business and I think, for the right people, um, that it's going to make a lot of people. It's going to make a lot of people. It's going to serve a lot of people a good life, both financially and fulfilling. It's very fulfilling For those that think it's a bad time. You know that's the crystal ball thing when should I buy into the stock market? So you've always got the contrarians always. But deep down in my bones, car business is a good business. It'll probably provide lots of families with lots of income. You know small business owners, entrepreneurs, they'll figure it out, they'll pivot.

Arthur:

We were worried about what you know manufacturers selling cars when hyundai did the whole genesis thing. Well, you know, we're still selling cars retail. We were worried about people buying cars online when carvana had the you know the big pylons with the cars inside the vending machine things. You still have car dealerships. I think the cost of real estate is going to have to make Metro centers rethink how they do it, as the downtown automotive group has done in Toronto and the Patterson group has done out here in Vancouver and a lot of US groups where they incorporate dealerships into the bottom of high rises and that's strictly from. Again, it boils down to return on investment and dealing with high real estate prices. But the car business is a good business. I think anybody that wants to be in it should be proud. I'm proud to be part of it and for me it just wasn't in the cards, it didn't feel right to be a dealer. But those that are pessimistic everybody's entitled to their own opinion. I just don't see it yeah.

MC:

I'm like a half and half. So a few years ago I was meeting with a dealer partner, client of ours, and I said you know, I'm, I think I'm interested in I don't know buying into a dealership. What do you recommend? He says be prepared to live in the crappiest town you can imagine, because those are usually the stores you can get for cheaper. And of course we were in northern Saskatchewan, right, and I'll admit, in that moment I realized my level of willingness was next to no, because my instant reaction was I don't know if I could live in northern Saskatchewan or something like that, but are you seeing much activity by way of people getting in and buying their first point yeah, I see a lot of dealer groups that are staking minority partners for 15 to 20 to 25%.

Arthur:

And those are the operators good operators that are looking to grow and just don't have the capital. And you know, for some of them I know a deal that we're in the middle of right now. He wants to be in Northern Saskatchewan. Oh, Because he knows he can sell lots of cars, he can make a good living and, more importantly for him, he's got a good quality of life. It's not like working in a big city. So it's really different folks for different strokes. Like you can sell me on that probably as much as they could sell you on that. I would need to be in a major center, but yeah, I still think people are out there buying the nice thing about northern saskatchewan is.

Arthur:

They've had drone grocery delivery forever, but the drones are called mosquitoes well, isn't the saying out there and I can say this because my wife's from saskatchewan that if you want to watch your dog run away, it'll take four days because it's so flat?

MC:

yeah you can stand on a baseball cap and see four days because it's so flat. You can stand on a baseball cap and see four days away. It's so flat. Isn't that interesting what you know? For those that are listening, I'm curious what would you advise an individual who's like man? That sounds appealing to me. I'd love an opportunity to get in, you know, as a minority partner. What do they need to have prepared in order to be in a position to secure that? I think a lot of people wonder that there's a lot of ambiguity. It's like do I need, is it as simple as tax returns? What do I need to show to be in the right position to approach those opportunities and say, yes, I'd love the shot at being a minority partner in a dealership.

Arthur:

I think it comes down to research and culture. I think you need to research or at least I would research dealer groups that have the minority model in place and the most important thing is culture. Any deal you do, in my belief, is a good deal of everybody's happy six months down the line. So there's some groups that have a certain culture, some groups that have a different culture, and I think it's what culture is most aligned with you and your home life and your life. Because you don't want to, you want all that in harmony. So if you do enough research and you join a dealer group as an operator and there's synergies there and the culture is right, I think all you I know all you really need to do is outperform, prove your value, show up to the table and they'll help you through everything else. It's not something that you're going to spin the bottle and say I'm going to partner with this dealer group because you don't know what you're getting into. It's like getting married.

MC:

Yeah, right, and I love how you're. You bring up culture. I mean, oftentimes we hear culture discussed so much in our industry, especially in the last two to three years, I feel like that topic has risen to the surface. Here you are now expressing a very real, tangible, quantifiable reason why culture is important, where I think a lot of people have had a challenge quantifying culture. Here you have no, because it's not just your lifestyle, it's a partnership, and how well that partnership goes impacts profitability and the other facets of life. You might be one of the few people, admittedly I've discussed, that are in the financial world, business world, who are leading the discussion with the culture piece and the lifestyle piece. What does that mean for you? How do you make that real for others to understand that your life has to be in harmony?

Arthur:

Well, you can only lead a horse to water. You can't make a drink, but you really need to, as somebody that's doing this, identify you know, best way I can give you an example is, when I speak culture, I speak about the management culture. If I'm all about having the customer appreciation day on Saturdays, where not only do I have a customer appreciation day but I have a female workshop for ladies that want to, with a female tech that want to learn a little bit more about a car, and my management culture only really cares about how many cars I sell, that's a disconnect. When I talk culture, right, right, and the other way I can sort of phrase it is you know, whenever we're looking to help somebody with a capital raise and to buy a dealership or to inject capital into a dealership, we always want to look for what's called friendly money.

Arthur:

Friendly money understands the business and understands that you're going to have hills and valleys, you're going to have bad months, going to have good months it's not what you did last year, divided by 12, because there is something called January and there is something called August and friendly money understands that no one's buying. Well, I shouldn't say no, but car sales are down in January and you know cause? Everybody's looking at their visa bill saying maybe I'll do it in February, march and in September everyone's at the lake, or, sorry, august, everyone's at the lake. So to have a partner that doesn't share the same culture, that understands those hills and valleys and the seasonality of the business is sometimes tough, because they're just taking last year, dividing it by 12 and saying you're down when in May and June, you'll be up year to date, july 1st, but possibly at the end of April you're not april, you're not.

MC:

I wrote down friendly money and I put it in quotation marks because I feel like that could apply to so many different business, to actually all businesses it could relate to, and especially I mean knowing as an agency owner. Boy oh boy, is it so much easier to work with someone when it's friendly money, where you aligned, where you share the same values, where you, to your point, each of you, can exhibit the faculties enough to remember that people move in patterns and seasons and a freak up in January doesn't mean all January, like you can just bank on that or that, you should just expect it always to be better than it was last year. Or you know, we talked pre-show a little bit about tariffs and the impact they might have on consumer trust or interest rates or insert any sort of variable here, and boy does friendly money make the difference.

Arthur:

Yeah, you know. A great example is I had a meeting yesterday at a hotel here and the hotel was quite empty in the lobby where we met and well, you know it was sunny here, that's why it was slow in the lobby. Aka, friendly money. They understand the environment right. So I agree with you.

MC:

It can be applied to any industry, in my opinion yeah, nobody is going to mess with sunny in vancouver, you know, don't even ask questions. We know where everyone is. They're outside getting their fix of vitamin D.

Arthur:

Well, it was really a shrug of the shoulders and he went eh, it's sunny out. He walked away.

MC:

That's awesome. This has been such a delight. I've learned so much. I've taken about four pages of notes. Arthur, how can those listening and watching as we wind down get in touch with you and connect?

Arthur:

The two best places are you can find me on LinkedIn or you can find me on my website. So I can ramble off everything, but it's probably too many letters and numbers. But LinkedIn and that website would be best Great.

MC:

Well, for those listening watching, we're going to link up to Arthur's website in the show notes so you can connect there as well as put a link to his LinkedIn. Reach out to him. There is a lot of really interesting things to consider, especially if you're thinking about hey, maybe I'm in a position where I've I'm in retail, but I would love a shot at ownership. He's the guy you want to ask questions to and, of course, if you're looking to acquire more stores and merge, he is the man you need to be looking for, arthur. Thank you so much for joining me on the dealer playbook podcast.

Arthur:

Thank you for having me.

MC:

Hey, thanks for listening to the dealer playbook podcast. If you enjoyed tuning in, please subscribe, share and hit that like button. You can also join us and the DPB community on social media. Check back next week for a new dealer playbook episode. Thanks so much for joining.

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Michael Cirillo

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