At this year’s New York Auto Forum, CBT News anchor Jim Fitzpatrick met with Gabe Robleto, Senior Vice President at Kerrigan Advisors, to discuss the latest trends in the dealership M&A market.
1. The dealership M&A market is experiencing robust growth, as evidenced by Kerrigan Advisors’ sales of 34 stores since the start of 2024 and 100 stores in the past 18 months. The growth has been driven by significant earnings accumulated by dealers during the pandemic, which have not been fully spent and are contributing to an increase in investment.
2. The demand for automotive dealerships is particularly high for franchises that show strong sales and a high UIO count, with Toyota and Honda being highlighted for their strong performance in these areas. Luxury brands like Mercedes, Lexus, and BMW also command high blue sky values due to their substantially higher sales per franchise compared to competing luxury brands.
3. Despite changes in gross and net profits due to vehicle availability and other economic factors, the decline in franchise values will be less severe than anticipated, with a drop of only 10% due for 2024. Robleto notes that the M&A market remains a seller’s market with peak valuations for top franchises in high-growth areas.
"We estimate that for 2024, the decline in franchise value is down about 10%. However, for the top franchises in the industry and high growth markets, we're still seeing peak valuations." — Gabe Robleto
Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 280 dealerships representing $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.
Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2024 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.
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