Powersports Dealership Due Diligence Checklist for Buyers
Buying a powersports store means taking on brand relationships, a floor plan, a shop full of customer units, a parts room and, often, a finance office with its own obligations. Careful powersports dealership due diligence helps buyers confirm what they are paying for and gives lenders the information they need to evaluate the deal. The checklist below organizes the review by area.
This article is general information for buyers of existing, operating powersports dealerships. Requirements vary by state, by manufacturer and by transaction. Buyers should rely on qualified attorneys, accountants and other advisors for their review. Nothing here is legal, tax or regulatory advice.
Financial Records
- Several years of tax returns and financial statements, including manufacturer-format statements if the store prepares them
- Monthly results by department to show seasonal patterns
- Documentation of owner compensation and proposed add-backs
- Receivables, including manufacturer incentive and warranty claims outstanding
- A complete schedule of existing debt and leases
Dealer Agreements and Brand Relationships
- Every current dealer agreement, with change-of-ownership and assignment terms
- Any notices of performance concerns, facility requirements or market changes
- Correspondence about pending approvals
See our article on powersports brand approval for how multi-line stores handle this.
Floor Plan and Unit Inventory
- Current floor plan statements and recent audit results
- Unit inventory list with model year, age, condition and location
- Status of any units sold but not yet paid off, demos and rental units
- Titles or certificates of origin for pre-owned and consigned units
Our article on the powersports floor plan explains why lenders and buyers focus on audit history.
Parts, Accessories and Apparel
- Recent physical count and aging of parts stock
- Apparel and accessories by season, size and style
- Special orders, customer deposits and return privileges with suppliers
Our article on powersports parts and accessories inventory covers how stock is priced at closing.
Service Department
- Technician roster, certifications, tenure and pay structure
- Repair order history, customer-pay versus warranty mix and backlog
- Customer units in the shop and how they will be handled at closing
- Records of any open manufacturer safety campaigns, which should be reviewed with counsel
Read more about the powersports service department.
Finance and Insurance Office
If the store arranges consumer financing or sells service contracts and protection products, buyers should review deal files, chargeback reserves, product provider agreements and complaint history. Consumer lending, disclosure and privacy rules are complex and vary by state. These matters should be reviewed with qualified counsel rather than assumed to be in order.
Staff
- Organization chart and key managers
- Compensation plans, including commission and spiff structures
- Employment agreements and any non-compete or non-solicitation terms, which should be reviewed by counsel
- Worker classification questions, which should go to qualified professionals
Real Estate and Facilities
- Lease or deed, zoning and permitted uses
- Showroom, lot, shop and storage condition
- Environmental review for fuel, oil and solvent handling
See our article on powersports dealership real estate.
Licenses, Insurance and Legal
Dealer licenses, titling authority and other permits should not be assumed to transfer. Buyers should also review insurance coverage, claims history and any pending litigation with their advisors.
What Lenders Will Request
Lenders typically want many of the same items. Our article on powersports dealer loan requirements explains what they frequently ask for.
US Professional Funding helps buyers finance the acquisition of existing, operating powersports dealerships and can help organize diligence materials for lender review. Learn more about our powersports dealership acquisition financing.
