First-quarter buy-sell activity reached record volume, according to Kerrigan Advisors’ Blue Sky Report, as more than 100 transactions closed encompassing 233 franchises that changed hands.
That number represents a 38% year-over-year jump, the sell-side adviser said, and came despite economic challenges, including high interest rates.
The activity is a record for first-quarter transactions, said Kerrigan, which estimates sales will surpass 400 for the year, or almost twice the prepandemic average and exceeding the record 397 set last year.
It attributes the surge in buy-sell dealmaking to the volume of owners putting their dealerships up for sale, making for a buyer’s market for the first time since the pandemic. That and the post-Covid fall in dealer profits are consequently lowering store values, even with earnings still exceeding 2019 levels by nearly 100%, Kerrigan said.
Nonetheless, it’s the dip in profits that’s moving many private dealers to put their stores up for sale in order to reap the return on the still-elevated valuations, says, Kerrigan, which debuted a Blue Sky Index to track dealership valuation changes, benchmarking it to Dec. 31, 2019. It said the new index is down 7% from the fourth quarter but 80% above 2019 levels.
Even with the valuation dip, the firm said top-performing import franchises in robust markets, particularly in Florida and Texas, are still commanding record valuations.
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 275 dealerships representing nearly $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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