On the latest Kerrigan Report for the month of November, Ryan Kerrigan, Managing Partner of Kerrigan Advisors joins CBT News to discuss the latest trends and market updates.
In the buy-sell market, the number of completed transactions has increased to 186 this year, compared to 181 from the previous year, a 16% increase. He says they expect the velocity of transactions to ramp up through the end of the year, and he attributes the rise to the automotive industry’s incredible rebound from the shutdowns back in the spring. The industry saw an impressive 94% jump in average dealership pre-tax profits. Kerrigan says it is a great time in the automotive industry, bringing more interest to mergers and acquisitions.
The limited amount of inventory enabled hirer grosses. If industry earnings continue at their current pace, 2020 will be the most profitable year on record. The Kerrigan Index has seen a strong rebound as it is currently up 23%.
Kerrigan says that large dealership groups are being driven to sell based on dealer families seeing the lifecycle of their dealership play out. The business continues to change and many dealer families are very wealthy. Valuations of auto groups continue to be very high making it a great time to sell.
Kerrigan concludes the conversation by answering if there are more sellers or buyers in the buy-sell market. He says that there are currently more sellers, however, he says there isn’t a lack of buyers in the market either. Buyers are very focused on building scale as they continue growing their business.
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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