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Tonkon in the Driver’s Seat for Fast Dealership Purchase Ride
Auto dealership sales are generally straightforward affairs that frequently involve both business and real estate assets. In 2015, Tonkon Torp stepped into a purchase transaction that had taken a unique turn when the auto manufacturer exercised its first right of refusal at the eleventh hour of a nearly complete purchase. This change of direction created an opening for Tonkon Torp’s client, a former general manager of a high-end automobile dealership, to achieve his goal of owning a dealership.
The opportunity arose during the sale of a highly sought after, high-end dealership and its associated real estate located in Southern California. The transaction was well underway, with purchase agreements fully signed and nearly ready to close. Most auto franchise agreements contain a provision that allows the manufacturer to exercise first right of refusal and step into the shoes of the buyer. To the surprise of the parties involved, the manufacturer did exercise its right as part of an initiative to increase diversity among ownership groups.
Upon learning about the possibility of becoming a first-time dealership owner, the client engaged Tonkon Torp to facilitate acquiring, financing, and closing the purchase. Because the manufacturer had assigned the purchase rights to the client after stepping into the shoes of the buyer, the terms – and timeline – of the original sale contract was still in play. Time was of the essence, and the priority became mitigating risk for the client while completing a contract negotiated by someone else.
Business attorneys Owen Blank, Morris Galen, and Mike Fletcher negotiated myriad details, including negotiating all corporate finance and credit facility aspects. They worked with the seller’s counsel, the lender’s counsel, and the manufacturer’s inside and outside counsel, since it would help finance the purchase and take a preferred equity position in the dealership. This team brought decades of experience in business, commercial, real estate, and corporate matters to this transaction, which closed within an extremely tight timeline.
Blank’s practice is focused on working with corporate, family-owned, and nonprofit organizations on a range of business, real estate, and commercial matters. A founding partner of Tonkon Torp, Morris is recognized as one of Oregon’s leading attorneys in real estate law. Fletcher’s practice focuses on debtor/creditor law, including bankruptcy and secured transactions.