IRVINE, Calif. — Kerrigan Advisors reports a total of 58 U.S. auto dealership transactions were completed in the third quarter, down 10% from the year-ago period but an 18.4% increase from the prior quarter. The buy/sell firm’s latest Blue Sky Report predicts dealers will add to a five-year streak of 200-plus acquisitions.
“Based on the first three quarters, 2019 is pacing to be another 200-plus transaction year, likely matching 2018’s high activity level. Kerrigan Advisors expects the third quarter’s deal momentum to increase in the fourth quarter as buyers and sellers are more motivated to close before year end,” the report states, in part.
Analysts pointed to a healthy economy as one of the key factors driving the dealership buy/sell market, citing a 2.9% gain in annualized consumer spending. Growth in consumer spending has helped offset “weakness” in the commercial sector, “weighed down by trade disputes and a slowing global economy.”
The report also pointed to a series of cuts to the Federal Reserve’s target interest rate as a key factor driving shopper behavior and dealers’ long-term outlooks.
“Supportive credit markets are the backbone of a healthy auto retail market, both for the consumer (auto loans) and the dealer (floorplan),” analysts wrote. “Not surprisingly, with an improved interest rate outlook, the average dealer reported strong earnings growth through the third quarter of 2019, continuing last quarter’s trend.”
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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