Sale of Houston area Kia dealership highlights the strength of the Kia brand in a large and high-growth metro area; the transaction marks Kerrigan Advisors’ 7th dealership sale in Texas in 2023

Houston, TX – June 7, 2023 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Houston, Texas-based Beck & Masten Auto Group in the sale of Beck & Masten Kia to Houston, Texas-based Group 1 Automotive (NYSE: GPI). This marks the 187th dealership sale transaction led by Kerrigan Advisors since 2015, and 11th Kia dealership sold.

The sale underscores the emerging power of the Kia brand in fast-growing, business-friendly markets like Texas. Beck & Masten Kia is ideally located in Tomball, a northwest Houston suburb adjacent to the fast-growing and affluent Woodlands area.

“Beck & Masten Kia’s success represents a compelling example of Kia’s tremendous accomplishments in recent years and the rising value of the franchise, particularly in large and growing metro areas, such as Houston,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The brand has grown market share 39% in the US since 2019, more than any other non-luxury franchise and its sales per franchise now surpass Honda, Subaru and Hyundai. Not surprisingly, buyer demand for the franchise has skyrocketed as evidenced in this transaction.”

According to the 2022 Kerrigan Advisors’ Dealer Survey, Kia had the highest expected valuation gain of all franchises: close to half (46%) of dealers surveyed expected the franchise to increase in value, surpassing Toyota and Hyundai for the first time. “We expect buyer demand for Kia franchises to grow throughout 2023, thanks to strong satisfaction among dealers, a refreshed lineup of vehicles, and the return of customer incentives as inventory increases,” continued Erin Kerrigan.

Owners John Beck and James Masten began their association in 1971, selling cars together at a local Chevrolet dealership. That partnership would eventually expand into ownership, first with a wholesale company, and, over the years, a long list of successful dealerships. Over the last four decades, Beck & Masten Auto Group has been honored with Dealer of the Year Awards, Mark of Excellence Awards, and more — all thanks to their focus on premier customer service and excellent employee relations.

“The success of Kia in greater Houston shows how the area has grown, along with the value of the franchise,” said James Masten, co-owner of Beck & Masten Auto Group. “With Kia, we saw an opportunity to invest in the brand and grow its footprint, for both new car sales and fixed operations. So, when it came time to sell it was incredibly important to find a buyer who could continue to invest in and nurture this emerging brand. This is why we turned to Kerrigan Advisors who has the experience and know-how, in both the Texas market and with Kia, to complete a transaction as important as this one.”

“It’s hard enough to sell a dealership that has a proven track record over decades of sales and service, but when a dealership is beginning to grow into its revenue potential like our Kia dealership, that’s even more complicated,” said John Beck, co-owner of Beck & Masten Auto Group. “Add to that the changing dynamics of the Texas automotive market — especially it’s incredible growth — and it was clear to us that Kerrigan Advisors was the only sell-side advisor with the expertise to make this transaction a success for all involved.”

Texas is the 2nd largest auto retail market in the nation, representing 9% of total US light vehicle sales. It is also among the most attractive to franchise buyers due to the state’s high sales per rooftop (6th highest in the nation) and 41% increase in light vehicle registrations since 2001.

“It was a pleasure to represent John Beck and James Masten in this transaction. Just as they did with their large Buick GMC stores, they successfully built the Kia franchise in northwest Houston,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “This project underlines the tremendous strides that Kia has made with respect to product line, brand, and penetration of the American heartland. Kia is now squarely on the map as a desirable franchise throughout the United States.”

Kerrigan Advisors has sold seven dealerships in Texas in 2023, making the firm the most active advisor in the state, as well as the most active sell-side advisor on larger transactions in the auto retail industry. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising, and acquisition valuation analysis, creating value for their clients at every stage of the auto retail lifecycle.

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 2022 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. 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. Kerrigan Advisors has represented some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of Texas Buick GMC dealerships highlights strong demand for top volume franchises in states with favorable business environments and marks Kerrigan Advisors’6th dealership sale in Texas in 2023

Incline Village, NV – May 12, 2023 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Houston, Texas-based Beck & Masten Auto Group in the sale of Beck & Masten Buick GMC North, Buick GMC South and Buick GMC Coastal Bend to Houston, Texas-based Group 1 Automotive (NYSE: GPI). This marks the 184th, 185th and 186th dealership sale transaction led by Kerrigan Advisors since 2015. Beck & Masten is a dominant auto group in Houston and Corpus Christi, retailing more than 11,700 vehicles in 2022 and representing more than one third of Buick GMC sales in the Houston MSA. The dealerships are amongst the highest volume Buick GMC franchises in Texas and the US, ranking as the #1 Buick GMC dealer in Texas for 22 consecutive years and the #1 Buick GMC dealer in the US six times.

Owners John Beck and James Masten first met at a Houston Chevrolet dealership in 1971, and subsequently partnered to start a successful wholesale company. Eight years later, the pair purchased Pontiac GMC in Tomball, Texas. The dealership was eventually relocated to Houston and is now called Beck & Masten Buick GMC North. The dealership has since won the Dealer of the Year Award 13 times from General Motors, a recognition of its decades-long accomplishment as one of the highest volume Buick GMC dealerships in the country. The success of Beck & Masten Buick GMC North brought about Beck & Masten Buick GMC South in 2000, which also grew into one of the top-performing domestic dealerships in Houston and Texas. Buick GMC South has been recognized with multiple Mark of Excellence and Dealer of the Year awards — success that has come about due to their focus on premier customer service and excellent employee relations.

“Beck & Masten has been an important auto retailer in the Houston market for decades, and we were honored to represent John Beck and James Masten, as well as their families, in this big decision,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “They've been partners for 50 years, and built very impressive market share for Buick GMC in the region. Group 1 Automotive has added a substantial domestic group to their Houston platform.”

“John and I have spent the majority of our adult lives building this business, and the decision to retire was a huge one for us,” said James Masten, co-owner of Beck & Masten Auto Group. “It was incredibly important that this be done right, for my family and for the families of our employees. I knew we needed to go with the best in the industry when it came to representing our sale, and it did not take long to figure out that Kerrigan Advisors was the best. When it comes to getting big transactions done, they have the most experience. They guided us along the way and led us to a great outcome.”

“We have spent our careers building dealerships, not selling them. James and I wanted an advisor exclusively focused on selling dealerships like ours,” said John Beck, co-owner of Beck & Masten Auto Group. “It's been a real pleasure to work with the professionals at Kerrigan Advisors throughout the sale process. We needed their guidance, and they expertly gave it to our families throughout the transaction process ensuring the sale was a success for all involved.” 

“We always appreciate the opportunity to work with leading Texas dealers like Beck & Masten,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “This transaction demonstrates that the Texas market is one of the best in the country. There is incredible buyer demand for top volume franchises in the Lone Star State, given its highly favorable business climate, population growth and quality of life. We expect to see a disproportionate share of the 2023 US buy/sell market take place in Texas.”

Texas is the 2nd largest auto retail market in the nation, representing 9% of total US light vehicle sales. It is also among the most attractive to franchise buyers due to the state’s high sales per rooftop (6th highest in the nation) and 41% increase in light vehicle registrations since 2001. Notably, Beck & Masten’s three Buick GMC dealerships have an 8% market share for Buick GMC sales in Texas.

Kerrigan Advisors has sold six dealerships in Texas in 2023, making the firm the most active advisor in the state, as well as the most active sell-side advisor on larger transactions in the auto retail industry. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising and valuation analysis, creating value at every stage of the auto retail lifecycle. 

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 2022 Kerrigan Dealer Survey, click here (https://www.kerriganadvisors.com/the-kerrigan-dealer-survey/). Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. 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. Kerrigan Advisors has represented some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Kansas City luxury dealership sold to Baxter Auto Group; Transaction marks 183rd dealership sold since 2015 by Kerrigan Advisors, the premier sell-side dealership advisor to top luxury dealerships in growth markets

INCLINE VILLAGE, NV – May 9, 2023 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Holman, a global automotive services organization, in its sale of Audi Shawnee Mission to Omaha, Nebraska-based Baxter Auto Group. The dealership, newly built in 2016, is the highest volume Audi dealership in the Kansas City MSA, a growing market with a strong economy and a highly educated workforce. It is also the 5th highest volume luxury dealership in the greater Kansas City metro area.

“We were honored to assist Holman in the strategic sale of its Audi franchise in Kansas City,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Knowing Holman’s commitment to community, creating a positive workplace and providing exceptional customer service, it was essential to identify a buyer that shared these key values. We found that in Baxter Auto Group who proved to be the perfect fit.”

For nearly a century, Holman has applied a standard of excellence to its business, growing from a single Ford dealership in 1924 into the 26th largest dealership group by 2022 new unit sales in the United States. Today, Holman owns twenty eight dealerships in eight states under twenty brands and six major divisions in the U.S., Canada, the U.K., and Europe. Like Holman, Baxter Auto Group is a family-owned enterprise led by Mickey Anderson. Founded in 1957, Baxter is currently the 33rd largest U.S. dealership group and serves communities in Nebraska, Kansas, and Colorado.

“Holman is pleased to be passing Audi Shawnee Mission’s keys to another family-owned company, one whose values, like ours, start with commitment to their community and employees,” said Gene Welsh, President, Retail Automotive for Holman. “With this transaction, we believe we are putting the Audi Shawnee Mission team in a better position for growth with Baxter who operates a number of premier dealerships in the region. We could not be more pleased with Kerrigan Advisors to have found an ideal buyer for Audi Shawnee Mission. Erin and her team kept our strategic objectives at the forefront during every stage of the sale process and shepherded this transaction to a successful outcome.”

“Audi is a growth franchise with a strong product lineup, and it’s particularly strong in the Central Region,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We continue to see buyers shifting their investments to high growth, less risky franchises, particularly where they can build out a regional footprint in a more meaningful way as Baxter is doing in Kansas City. This transaction is further evidence that the best dealerships in the fastest growing, most business-friendly markets will see robust interest from buyers in 2023,” continued Ryan Kerrigan.

A growth brand, Audi has nearly doubled its US light vehicle market share since 2008; as of September 2022, the brand’s market share in the Central Region was up 2.3% — significantly outperforming its top luxury competitors. The Audi Shawnee Mission dealership is in Johnson County, the most populous and fastest growing county in the state, and where the highest volume top luxury dealerships in the Kansas City are located. The larger Kansas City metro area has grown 19% since 2000, nearly 10% higher than the U.S. and with a thriving economy: more than 46% of households boast annual incomes that are 6% higher than the U.S. average.

Kerrigan Advisors is the most active sell-side advisor on larger transactions in the auto retail industry, achieving the highest sale price per client of any firm over the last five years. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising and valuation analysis, creating value at every stage of the auto retail lifecycle. 

James M. Kearney and Tyler J. Runsten of Stoel Rives LLP served as legal counsel to Holman. Don Erftmier, Jr. of Erftmier Law, LLC served as legal counsel to Baxter.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. 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. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting 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 2022 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Kinsel Toyota and Kinsel Ford, Lincoln, Mazda of Beaumont sold to Doggett Automotive Group; Transaction marks 182nd dealership sold since 2015 by Kerrigan Advisors, the premier sell-side dealership advisor to higher value dealerships and dealership groups

Incline Village, NV – May 2, 2023 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Beaumont, Texas-based Kinsel Motors in its sale of Kinsel Toyota and Kinsel Ford, Lincoln and Mazda to Houston, Texas-based Doggett Automotive Group. Kinsel Motors recently celebrated its 100th anniversary of being in business in Texas and has been a mainstay in Beaumont since 1944.

“We were honored to work with the Kinsel family to identify a buyer to continue their family’s long legacy of exceptional customer service in Beaumont, Texas,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The Kinsel family has served this auto retail market for over a century. The success of their dealerships, some of the highest volume in Southeast Texas, drove tremendous buyer demand, with Doggett ultimately being the best match for the family. Our team is very fortunate to work with exceptional dealer families, like the Kinsels, to ensure their personal and financial goals are paramount and most importantly achieved in a once-in-a-generation sale.”

“For four generations, Beaumont residents have counted on Kinsel Motors to help them buy and service their vehicles,” said Joe Bob Kinsel, co-owner of Kinsel Motors. “It has been our privilege to build something special here in Beaumont and the Southeast Texas community. We’re grateful to the community, and honored to have received so much friendship and support for the past 80 years.”

“Having this generational connection to Beaumont meant that getting this transaction right was the most important thing for our family,” continued Kinsel. “The Kerrigan Advisors team, particularly Erin Kerrigan, Marie Brashears and Mercedes Hendricks, were some of the most professional people we have ever worked with in our careers. Their attention to detail and tremendous commitment to their clients are what make them the best in the business.” 

“It’s been a privilege to manage and lead so many loyal and hardworking employees at Kinsel Motors,” said Craig Kinsel, President of Kinsel Motors. “The secret to our success is no secret — it has always been the people who come to work every day and provide stellar customer service. So, when it came to the mechanics of the deal, the guidance we received from Kerrigan Advisors was a critical factor in our success. While selling our business was a hard decision, choosing Kerrigan Advisors to represent us made it a much easier one. The process could not have gone smoother with Kerrigan leading the way.”

Texas is the 2nd largest auto retail market in the nation and generates the 4th highest revenue per dealership averaging $93 million in 2022, 30% higher than the national average. It is consistently the 2nd most requested state in Kerrigan Advisors’ buyer database and is arguably the most attractive in the nation given its high sales per rooftop and impressive growth. In 2022, Texas dealerships accounted for nearly 10% of total US dealership revenue.

“The Texas market remains in high demand by dealership buyers and this transaction shows how active the buy/sell market is for volume dealerships in high-growth, business-friendly areas. Texas is one of the largest economies in the world, and continues to experience above average population and economic growth,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “As a result, buyer demand for Texas dealerships continues to outstrip supply, resulting in top valuations for dealerships in the state.”

Kerrigan Advisors is the most active sell-side advisor on larger transactions in the auto retail industry, achieving the highest sale price per client of any firm over the last five years. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising and valuation analysis, creating value at every stage of the auto retail lifecycle. 

Stephen Dietrich and Sarah Seedig of Holland & Knight served as legal counsel to the seller. Monica Hoenshell of Calvert Law Firm served as legal counsel to the buyer.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. 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. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting 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 2022 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Completed transactions decline 2.3% for the full year 2022, due to a 41% decline in the fourth quarter 2022 and driven largely by a reduction in public auto retailers’ acquisition spending, according to the 2022 Blue Sky Report® by Kerrigan Advisors; private buyers moved ahead to dominate the 2022 buy/sell market as dealership earnings hit their third consecutive record year  

Incline Village, NV – April 17, 2023 – The auto dealership buy/sell market experienced its second most active buy/sell year ever in 2022, with a 25% increase in transactions in the first three quarters of the year compared to 2021, and a record 845 franchises sold during that period, according to the just-released Blue Sky Report® by Kerrigan Advisors. However, a dramatic decrease in transactions in the fourth quarter led to a 2.3% decline for the year overall. 

In 2022, 374 dealership transactions were completed, compared to 383 in 2021, impacted by a fourth quarter decline in transactions of 41% to 93, compared to 158 in the fourth quarter of 2021. This was largely a result of the public auto retailers’ lowered valuations, which spurred a significant reduction in their acquisition spending in the fourth quarter of 2022.

The publics’ acquisition spending on US dealerships was 79% less in 2022 than in 2021, according to the report, a dramatic about-face from the prior year. They spent $1.9 billion in 2022, $7.1 billion less than in 2021, but still 155% higher than the pre-pandemic average of $740 million. By the third quarter of 2022, the publics’ average blue sky multiple had declined to just 2.9x, a 64% reduction from their peak in Q1 2021. Believing their companies were undervalued by Wall Street, the public auto retailers chose to primarily allocate their capital to acquiring their own stock in 2022 with 51% of their capital going toward stock buybacks, more than double 2021’s level and the highest level in recent history.

“Despite the public auto retailers reduced acquisition spending, the industry still had the second most active buy/sell market ever, with private buyers dominating the market and putting their substantial war chest of capital to work,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Private dealers’ acquisition activity is a real endorsement of the auto retail business model and systemic of the industry’s strength over the last three years. Even in a rising interest rate environment, dealers voted with their pocketbooks and grew their businesses through acquisition in 2022 and continue to do so in 2023.”

Much of the activity in the 2022 buy/sell market was, again, driven by surging dealership earnings which hit a third consecutive record year. Kerrigan Advisors estimates that average dealership earnings rose 9.0% in 2022 as compared to 2021, ending the year 210% above the pre-pandemic five-year average from 2015-2019.

As the publics’ share of the buy/sell market declined in 2022, private buyers leveraged their strong balance sheets to make substantial acquisitions, rebounding from an all-time low buy/sell market share in 2021 of 71% to 94% in 2022. Multi-dealership transactions, which were particularly impacted by the decline in public acquisition spending, fell 24% in 2022 to 96 compared to 126 in 2021. Nevertheless, this was 67% higher than their pre-pandemic average of 58.

“While the publics ceded buy/sell market share to the private dealership groups in 2022, there is potential that these companies could increase their capital allocation to US dealership acquisitions in 2023,” said Kerrigan, who noted that, in 2023, The Kerrigan Index™ has risen nearly 14% through March, with five of the publics reaching record stock valuations in February.  

“With their tremendous liquidity - a collective $7.6 billion - the publics will continue to focus on acquisitions as a means to grow their top and bottom lines. Assuming the challenges associated with the brewing banking crisis do not extenuate, some of these companies may choose to increase their allocation to dealership acquisitions in 2023.”

2023 Buy/Sell Trends

In the 2022 Annual Report, Kerrigan Advisors identified the following four important trends that are expected to meaningfully impact the market in 2023.

·       Buyers become increasingly selective with their acquisition criteria

·       Blue sky pricing is based on profit projections rather than historical averages

·       As interest rates rise, dealership real estate values may decline in 2023

·       OEMs more aggressively manage their dealership networks

“The biggest trend for the buy/sell market in 2023 is that the ‘cream’ is starting to rise to the top,” said Ryan Kerrigan, Managing Director at Kerrigan Advisors. “The buy/sell market is beginning to diverge into a ‘have and have not’ marketplace, where certain dealerships remain in high demand, commanding tremendous pricing power, while others struggle to identify a buyer.”

According to the report, in 2021 and 2022, dealers were anxious to put their rising pool of capital to work, throwing a wide net when determining which acquisitions met their parameters. But, in 2023, they are more judicious, paying a premium for top franchises in high-growth, business-friendly markets, such as Florida and Texas, while discounting riskier franchises in lower-growth markets, particularly those with low sales volume. Kerrigan Advisors is also seeing a notable migration in buyers’ acquisition preferences to higher volume dealerships due to the economies of scale and projected higher profitability of these stores, a trend noted in the Third Quarter 2022 Blue Sky Report. With just 31% of dealerships selling 750 new vehicles annually on average, Kerrigan Advisors finds high volume dealerships can command premium pricing due to strong buyer demand for these scalable assets.

Honda and CDJR Multiple Decrease, Buick GMC and Cadillac Multiples Could Increase in 2023

Kerrigan Advisors made several adjustments to its blue sky multiples and multiple outlook this quarter, reducing Honda’s high-end multiple by .25. Honda lost significant market share in 2022 - down 26.9%, the largest loss of any non-luxury franchise. Notably, Honda’s sales per franchise fall below Hyundai and Kia for the first time and a decline in buyer demand for the franchise towards the end of last year brought down the multiple. In the case of CDJR, Kerrigan Advisors reduced its multiple on the high and low ends by .25, as the franchise saw inventories rise and sales decline, which is resulting in a reduction in new vehicle gross profits, reduced overall dealer profitability and declining buyer demand.

Kerrigan Advisors saw improvements in the outlook for Buick GMC and Cadillac. Both franchises increased market share and sales per franchise, particularly as they reduced franchise count. With these moves, Kerrigan Advisors observed an increase in buyer demand for the franchises and expects both franchises could see their multiples rise in 2023. In particular, Cadillac had the largest sales per franchise increase of any franchise in 2023 (165 to 240 or 45%), resulting in increased dealer profitability, particularly in major metros where franchise consolidation is meaningful, and with stand-alone franchises, where sales per franchise is even higher than the average.

Highlights from the Q4 2022 Blue Sky Report® by Kerrigan Advisors include:

·       374 dealership transactions were completed for the full year 2022. While this was a 2.3% decline compared to 2021, 2022 remained the second most active buy/sell year on record.

·       93 dealership buy/sell transactions were completed in the fourth quarter, a 41% reduction from the fourth quarter of 2021.

·       Auto retail recorded its third consecutive year of record earnings in 2022, rising an estimated 9% in 2022 as compared to 2021, and ending the year at an all-time high of $4.43 million, 210% above the pre-pandemic five-year average of $1.43 million.

·       The public auto retailers reduced their acquisition spending on US dealerships by 79% in 2022 spending $1.9 billion on the purchase of 52 US dealerships.

·       Multi-dealership transactions fell 24% from 126 in 2021 to 96 in 2022, but were 67% higher than their pre-pandemic average of 57.6 (2015-2019).

·       The average number of franchises sold per multi-dealership transaction declined to 3.4 in 2022, from 4.0 in 2021.

·       The publics’ average blue sky multiple declined to 2.9x by the third quarter of 2022, 40% below the average private blue sky multiple.

·       In 2022, just 21% of the public auto retailers’ capital was allocated towards US dealership acquisitions, less than one-third of 2021’s level, when 64% of their capital was deployed toward US dealership acquisitions.

·       Private buyers’ share of the buy/sell market rebounded to 94% in 2022 from its all-time low of 71% in 2021.

·       Import luxury and non-luxury buy/sell market shares rose to 43% and 18% respectively by the fourth quarter of 2022, while domestic buy/sell market share dropped to just 39%.

·       The Kerrigan Index™ declined 33.4% in 2022, stressed by rising interest rates and recession risks, but rebounded 28.5% through mid-February 2023 with five of six public retailers achieving all-time high stock prices in 2023.

The Blue Sky Report®, published by Kerrigan Advisors, is the auto retail industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. The quarterly report, received by over 11,000 industry recipients in 35 countries, includes analysis of all dealership transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments. For more details and to preview the report, click here. To sign up to receive the quarterly report, click here.

Kerrigan Advisors 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.

About Kerrigan Advisors 

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers in the US. The firm advises auto dealers nationwide, enhancing value through the lifecycle of growing, operating and monetizing their businesses, as well as offering restructuring and turnaround consulting services. Since the firm’s founding, Kerrigan Advisors has had the honor of representing the industry’s largest transactions, including more Top 150 Dealership Groups than any other firm in the industry. Led by a team of veteran industry experts, the firm does not take listings, rather Kerrigan Advisors develops a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital-raising services, the firm also provides a suite of consulting services including growth strategies, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate analysis.

Kerrigan Advisors publishes The Blue Sky Report®, which is the auto industry's most comprehensive and authoritative quarterly report of dealership buy/sell activity and franchise values, received by over 11,000 industry participants in 35 countries. To register to receive The Blue Sky Report®, click here. Kerrigan Advisors also publishes The Kerrigan Index™, the only monthly report tracking the seven publicly traded auto retail companies. To access The Kerrigan Index™, click here.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

According to Third Quarter 2022 Blue Sky Report® by Kerrigan Advisors, dealership buy/sells increase 25% YoY as auto retailers overcome economic headwinds to achieve a 205% increase in earnings compared to pre-pandemic averages; dealers focus on expansion through acquisition with almost 50% planning to add one or more store, but low stock prices dampen public auto retailers buy/sells

Incline Village, NV – December 20th 2022 – Despite significant economic uncertainty, the auto dealership buy/sell market stayed in the third hot quarter of 2022 with a record 281transactions, according to the just-released Third Quarter 2022 Blue Sky Report® by Kerrigan Advisors. Completed dealership buy/sells increased 25% compared to the first nine months of 2021; and, for the 12 months ending September 2022, the buy/sell market recorded 439 completed transactions – an industry high. During the same time period, the average US dealership earned an estimated $4.24 million, a 205% increase from pre-pandemic levels.

The strong performance comes in the face of elevated inflation, rising interest rates and a volatile stock market, underscoring the countercyclical nature of the auto retail business model and the reason dealers continue to seek expansion. According to the 2022 Kerrigan Dealer Survey of over 600 dealers, nearly 50% plan to add one or more dealerships to their group in the next 12 months, while only 2% expect to divest. High volume dealerships, which benefit from sustainable earnings margins because of dealership-level economies of scale, according to the report, are in particular high demand and selling at a price premium.

“We see the current market as a robust seller’s market, one that will persist into 2023,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “There’s a significant capital surplus on dealers’ balance sheets. The industry is on pace for a third consecutive year of record earnings, despite declines in used car margins and some new car margins. Improvements in sales volumes, increases in fixed operations, and improved employee productivity have resulted in rising profits and have more than offset inflationary pressures and interest rates increases.”

With the industry entering its fourth year of historically high profits, buyers are beginning to adjust to the “new normal” of higher profits when valuing dealerships, basing valuation on elevated post-pandemic earnings, and discounting the possibility of a return to pre-pandemic levels. This calculus spurs an expectation that today’s higher blue sky values will sustain into 2023, consistent with the results of the Kerrigan Dealer Survey where the majority of dealers project unchanged valuations next year. These expectations are in line with the premium valuations Kerrigan Advisors continues to achieve on behalf of the firm’s clients.

Despite these positive expectations from most private dealers, public auto retailers’ acquisition activity decreased dramatically to 7% of buy/sell market share, from 29% in 2021, as their stock prices have declined. The Kerrigan Index (of the seven publicly traded US auto retail companies) was down 25% year-to-date through November, underperforming the S&P 500 by 76%. Blue sky multiples for publics now average just 2.9 times, compared to 8.0 times at their peak in 2020. The softening of the public groups’ buying power also led to a reduction in multi-dealership transactions for the third quarter which, Kerrigan Advisors expects, will lead to lower transaction activity in the fourth quarter 2022.

“Wall Street is reacting to the near-term impact of a potential recession and monitoring certain data points that could lead to a decline in dealership earnings, specifically inflation and interest rates,” continued Kerrigan. “Despite pent-up consumer demand, some fear new car sales could remain at today’s depressed levels, even if supply improves, due to softening consumer demand caused by rising interest rates and declining affordability.”

In spite of recessionary risks, Kerrigan points out that there are reasons to be optimistic that OEMs will not revert to oversupplying the market this time. Since the pandemic, OEMs have seen that their greatest profitability comes from appropriately supplying the market with vehicles. Ryan Kerrigan, Managing Director at Kerrigan Advisors notes, “We believe this supply discipline will result in lower days supply going forward and help to sustain higher new vehicle gross margins, providing some counterbalance to any decline in demand as a result of a recession.”

Third Quarter 2022 Buy/Sell Trends

Kerrigan Advisors has identified the following three trends which it expects to meaningfully impact the buy/sell market for the remainder of the year and into 2023:

·       Dealers’ valuation outlook begins to diverge more significantly by franchise

·       Scale on a dealership level results in price premiums for higher volume dealerships

·       Buyers remain skeptical of OEMs’ plans to disrupt the industry with new technologies and retail strategies

Kia and Hyundai Multiples Increase; Ford Sees Reduced Multiple; Honda’s Multiple Outlook Changed from Steady to Negative

For the third quarter of 2022, Kerrigan Advisors increased the multiples for Kia and Hyundai to 4.0 on the low-end and 5.0 on the high-end and reduced Ford’s multiple to 3.25 on the low-end and 4.25 on the high-end. For the first time, Kia and Hyundai franchises surpassed Toyota in the fourth annual Kerrigan Dealer Survey to become the franchises most expected to increase in value in 2023. This is consistent with rising buyer demand based on Kerrigan Advisors’ transaction work nationwide.

“Buyers are impressed with Kia and Hyundai’s ability to increase market share, grow their UIO count, and remain disciplined with their dealer network,” said Ryan Kerrigan. “We see this resulting in rising sales per franchise. Kia and Hyundai have worked closely with their dealer body to grow market share and maintain their tremendous profit improvement since the pandemic.”

Ford’s reduced multiple is mostly due to the barrage of announcements regarding changes to its retailing model with the rollout of EVs. While some higher volume dealers and top groups show optimism for the franchise, the majority of dealers, especially smaller dealers, have a negative outlook on the new sales structure and the investment requirement. Almost 60% of dealers surveyed by Kerrigan Advisors believe Ford’s planned changes to their dealer model will have a negative impact on future franchise profitability. With this multiple adjustment, Kerrigan Advisors retains a negative outlook on Ford’s blue sky multiple given the risk of declining buyer demand for the franchise.

Kerrigan Advisors also downgraded the outlook for Honda’s blue sky multiple this quarter. Honda had the largest decline of any import franchise in Kerrigan Advisors 2022 Dealer Survey and was the second worst performer behind Ford, when compared to the 2021 survey results. Kerrigan Advisors believes this negative sentiment is primarily a result of Honda’s market share loss due to significant sales declines, most notably relative to Kia and Hyundai.

Highlights from the Q3 2022 Blue Sky Report® by Kerrigan Advisors include:

·       A record 281 dealership buy/sell transactions were reported through the third quarter of 2022, resulting in 439 transactions for the 12 months ending September 2022.

·       The average US dealership earned an estimated $4.24 million, a 205% increase from pre-pandemic levels for the 12 months ending September 2022.

·       Kerrigan Advisors’ 2022 Dealer Survey found that 74% of surveyed dealers expect dealership earnings to remain at today’s currently elevated levels or increase to new highs in 2023.

·       Almost 50% of dealers surveyed for the 2022 Kerrigan Dealer Survey plan to add one or more dealerships to their group in the next 12 months, while only 2% expect to divest.

·       Kerrigan Advisors expects that the fourth quarter will see a decline in buy/sell activity relative to the fourth quarter of 2021 when a record 158 transactions closed, largely due to a reduction in multi-dealership transactions, particularly mega transactions.

·       Multi-dealership transactions decreased from 2021’s 35% of total transactions to just 25% in 2022, predominately as a result of the publics’ reduced buying power.

·       Import non-luxury franchises sustained market share increases from the first half of the year, comprising 38% of the buy/sell market for the first 9 months of 2022.

·       The public auto retailers spent more than $3.2 billion on stock buybacks year-to-date, a 43% increase over the same period in 2021. By contrast, they allocated just 24% of their capital, $1.23 billion, to US dealership acquisitions, a 43% decline from the same period last year.

·       Stock price volatility, demonstrated by The Kerrigan Index being down 25% year to date through November, has decreased the publics’ buy/sell market share to 7% from 29% in 2021.

·       As of the third quarter, the average blue sky multiple for the industry’s public companies was just 2.9x.  

The Blue Sky Report®, published by Kerrigan Advisors, is the auto retail industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. The quarterly report, received by nearly 10,000 industry recipients in 35 countries, includes analysis of all dealership transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments. For more details and to preview the report, click here. To sign up to receive the quarterly report, click here.

Kerrigan Advisors 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.

About Kerrigan Advisors 

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers in the US. The firm advises auto dealers nationwide, enhancing value through the lifecycle of growing, operating and monetizing their businesses, as well as offering restructuring and turnaround consulting services. Since the firm’s founding, Kerrigan Advisors has had the honor of representing the industry’s largest transactions, including more Top 150 Dealership Groups than any other firm in the industry. Led by a team of veteran industry experts, the firm does not take listings, rather Kerrigan Advisors develops a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital-raising services, the firm also provides a suite of consulting services including growth strategies, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate analysis.

Kerrigan Advisors publishes The Blue Sky Report®, which is the auto industry's most comprehensive and authoritative quarterly report of dealership buy/sell activity and franchise values, received by nearly 10,000 industry participants in 35 countries. To register to receive The Blue Sky Report®, click here. Kerrigan Advisors also publishes The Kerrigan Index™, the only monthly report tracking the seven publicly traded auto retail companies. To access The Kerrigan Index™, click here.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Earnhardt Volkswagen and Rodeo Kia in the Phoenix metro area sold to Ken Garff Automotive Group; marks 177th dealership sale led by Kerrigan Advisors since 2015, and the 5th dealership sold by Kerrigan Advisors in Arizona since 2020, making the firm the most active in the state

Incline Village, NV – December 14, 2022 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Phoenix, Arizona-based Earnhardt Auto Centers in its sale of Earnhardt Volkswagen in Gilbert-Chandler, and Rodeo Kia in Avondale to Salt Lake City, Utah-based Ken Garff Automotive Group (the 9th largest US dealership group by 2021 new unit sales). Earnhardt Auto Centers is one of the largest US family-owned dealership groups, most recently ranked No. 18 on Automotive News' list of the Top 150 Largest US Dealership Groups.

With this transaction, Kerrigan Advisors has now sold six dealerships on behalf of the Earnhardt family. The transaction marks the 177th dealership sale led by the firm since 2015, and the 5th Arizona dealership sold by Kerrigan Advisors since 2020, making Kerrigan Advisors the most active dealership sell-side advisor in the state.

“We continue to be impressed with Kerrigan Advisors. The team are experts, hardworking and the best in the business, especially when it comes to accurate valuations that ensure a successful sale,” said Dodge Earnhardt, Co-Owner of Earnhardt Auto Centers. “As high-volume dealerships with popular brands in greater Phoenix, it was critically important to sell our Kia and Volkswagen dealerships to a buyer who could realize the stores’ full potential. Kerrigan Advisors again found us the perfect buyer in the Ken Garff Automotive Group.”  

“It was a sincere pleasure and honor to once again represent the Earnhardt family in the sale of their valuable dealerships and property,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors.  “The success of these dealerships, the power of their brands and the strength of the Phoenix market - one that our firm knows well – created tremendous buyer demand. We congratulate the Ken Garff Automotive Group on another successful purchase in one of the best auto retail markets in the country.”

“Kerrigan Advisors helped us find the right buyer in this market,” said Derby Earnhardt, Co-Owner of Earnhardt Auto Centers. “These dealerships are located in affluent Phoenix suburbs. Kerrigan Advisors’ extensive knowledge of the buyer community, particularly for Phoenix, ensured the right buyer for our stores. No other advisor can match Kerrigan in that regard. There’s a reason this is the 6th dealership we have sold with Kerrigan Advisors. We cannot recommend them enough to other dealers considering a sale.”

Kia, as a top brand in the Phoenix market, boasts a 40% higher market share in the Phoenix area than the national average, and Rodeo Kia is the top-ranked dealership in sales experience for all Kia stores in the market. Earnhardt Volkswagen is the 2nd highest volume VW dealership in the Phoenix metro and is located in Gilbert-Chandler, a top retail area in Phoenix.

“Despite some challenging economic headlines nationally, the Phoenix market remains one of the highest demand metros in the US, just as Kia is among the hottest brands for buyers,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “According to our recent Kerrigan Dealer Survey, Kia surpassed Toyota for the first time to become the brand dealers most expect to increase in value in 2023. There’s no doubt that Kia and Phoenix are an ideal match in terms of growth and opportunity.”

Kerrigan Advisors is the most active sell-side advisor on larger transactions in the auto retail industry, achieving the highest sale price per client of any firm over the last five years. The firm attributes its success to its team’s laser-focus on fulfilling each client’s personal and professional goals. In addition to its sell-side advisory work, the firm offers strategic consulting services to dealers and their families, including growth planning, capital raising and valuation analysis, creating value at every stage of the auto retail lifecycle. 

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 2022 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. 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. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of five Sacramento dealerships to Canadian-Based Knight Automotive Group marks the 175th dealership transaction led by Kerrigan Advisors since 2015

Incline Village, NV – December 8, 2022 –– Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Lasher Auto Group in its sale of five dealerships: Elk Grove Acura, Audi, Chrysler, Dodge, Jeep, Ram (CDJR), Subaru, and Volkswagen to Knight Automotive Group. The Lasher Auto Group dealerships are among the area’s highest volume dealerships, including Elk Grove CDJR, which is the 3rd and 14th highest volume CDJR dealership in California and the US, respectively, as well as Elk Grove Subaru, the highest volume Subaru dealership in Sacramento based on 2021 new unit sales.

“We were honored to represent Lasher Auto Group on its sale to Knight Automotive Group,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “This transaction is a perfect example of the tremendous value buyers place on high volume, high performing dealership platforms in top growth markets, such as Elk Grove, California. The Lasher Auto Group as one of the highest volume CJDR dealers in the US resulting in a significant price premium due to strong buyer demand despite some of the economic headwinds on the horizon.”

Established in 1955, Lasher Auto Group began when Wes Lasher opened his initial Volkswagen store in Sacramento. In 1972, he opened an Audi dealership, and eventually handed over management to sons Mark and Scott Lasher. In 2003, the family expanded to Elk Grove, a high growth Sacramento suburb and grew the business along with the community. Today, Lasher Auto Group is consolidated in the Elk Grove Auto Mall. The dealerships dominate the Elk Grove auto retail market, with 34% market share of new units sold in 2021. Elk Grove is the second highest volume car market in Sacramento, with approximately 180,000 residents and a population growth rate of 17% since 2010 – 131% faster than the US average.

“We’ve always prioritized our long-standing connection to the thriving Sacramento auto retail market, particularly our customers and employees,” said Lasher Auto Group Co-Owner Scott Lasher. “We are grateful that Kerrigan Advisors identified a private buyer with the same community, customer and employee focus – one committed to growing a group in California and being great stewards of our family’s dealership group going forward.” 

Mark Lasher, Lasher Auto Group Co-Owner added: “Kerrigan Advisors is the premier advisor for dealership groups for a reason. They provide guidance through every phase of the transaction and do so in alignment with their client’s strategic objectives. They ushered this transaction from beginning to a very successful outcome and found an international buyer who appreciated the lucrative financial opportunity the Sacramento auto retail market, particularly in Elk Grove, presents.”

“This transaction reflects a trend we reported on in our second quarter 2022 Blue Sky Report. Specifically, the rise in international dealers coming to the US to acquire dealerships, a reflection of the value these buyers place on our strong franchise laws,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We believe this trend will continue as the OEMs seek to disrupt the legacy auto retail model, particularly outside the US where franchise protections are weak, and ultimately implement their agency model which could have a negative impact on future franchise values.”

The transaction marks the 171st, 172nd, 173rd, 174th and 175th dealerships sold by Kerrigan Advisors since 2015, bringing the total number of franchise sales they have led in 2022 to 48, and marking their 9th multi-dealership transaction for the year.

Stephen Dietrich, Sarah Seeding and Karl Lott of Holland & Knight served as legal counsel to the seller. David Meyer, Gus Paras and Hen Amir served as legal counsel to the buyer.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. 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. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

A positive outlook by the majority of dealers is tempered by a rising minority who think valuations and profits will decline, according to the recently released 2022 Kerrigan Dealer Survey.

Incline Village, NV – November 7, 2022 – Auto dealers’ optimism about the valuation of their dealerships remains strong headed into 2023, according to the newly-released 2022 Kerrigan Dealer Survey, with a majority expecting record valuations to remain steady or increase over the next 12 months (80%) and just 20% projecting a decline in valuation.   

The survey by Kerrigan Advisors queried over 600 auto dealers about their views on the future value of their businesses, as well as their perspective on franchise valuations and acquisitions. The results show sentiments about the year ahead fall in line with industry consolidation trends, the high level of buy/sell activity, and record valuations, as reported in Kerrigan Advisors’ Second Quarter 2022 Blue Sky Report®. The survey also aligns with the second quarter report’s findings that blue sky values are becoming harder to assess with the impact of rising interest rates beginning to affect public auto retailer valuations and possibly leading to a softening in consumer demand.

“After high expectations shaped by over two years of record-breaking profit increases, dealers today are striking a more moderate stance as compared to last year’s bullish outlook. Although the majority expect profits and valuations to remain the same, or increase, over the next 12 months, a rising minority of dealers have modified their expectations downward for the next 12 months,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “As a result, while we believe transaction activity will remain elevated in 2023 as dealers seek to add scale to their businesses, we also think there is slightly more risk to valuations, and to the buy/sell market, going into next year.”

60% of dealers in the survey expect the value of their dealership/dealership group to stay at today’s record level over the next 12 months, with 20% expecting an increase in valuation, down from 61% in 2021. While only 6% of dealers anticipated a valuation decline last year, 20% now expect a decline in the next twelve months, a 233% increase from 2021. The survey reveals a clear increase in cautiousness by dealers about the future: that 34% of dealers expect higher profits in the next 12 months represents a sharp decline from the 79% that expected profit increases in 2021. Those expecting profits to decline has increased to 25%, from 6% in 2021.

Nevertheless, few (only 2%) are planning to sell any of their dealerships. In fact, nearly half (48%) say they plan to grow their business through the acquisition of one or more dealerships in the next 12 months. “The survey illustrates that a disproportionate number of dealers are planning for growth, rather than exit. This is consistent with what we see in the marketplace. There are still many more buyers than sellers, and we expect this supply/demand imbalance to persist into at least 2023,” continued Erin Kerrigan. “Furthermore, we believe the supply/demand imbalance will sustain current valuations over the next 12 months in keeping with the outlook of most dealers, according to our 2022 survey results.”

The survey also queried dealers on the expected impact of OEM planned changes to the dealer model, specifically in terms of future profitability. With the exception of Ford, the majority of dealers surveyed do not expect OEMs’ changes to negatively impact future profits, though they were decidedly more negative on Cadillac, Chevrolet, Buick GMC, Lincoln, and Volvo. Toyota, the most trusted OEM, once again, had the most positive outlook, with 22% expecting an increase in profits from future changes and just 18% having a negative outlook.

“With the exception of Ford, dealers seem relatively unconcerned by potential OEM changes to the auto retail model at this point,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “For the most part, dealers are skeptical of OEMs’ timelines for electrification and other new retailing concepts. For this reason, we believe dealers have not factored in any dramatic business model adjustments and do not expect a near term impact on dealership profitability.”

Dealers also shared their perspectives on the direction of specific franchise values. Over 40% expect Hyundai (45%), Kia (46%), and Toyota (41%) to increase in value over the next 12 months; this is the first time Hyundai and Kia surpassed Toyota to lead the survey results. Four franchises that had met this criterion in 2021, Honda, Lexus, Porsche, and Subaru, no longer do, with significantly fewer dealers expecting their values to increase. Honda, in particular, saw the largest percentage point decline of any import franchise in the survey as compared to 2021 results, likely due to the brand’s loss of market share in 2022.

Over 90% of dealers surveyed identified BMW, Lexus, Porsche, and Toyota as the franchises least likely to decline in value, significantly fewer than the nine franchises that met this criterion last year. At least 30% of dealers expect to see valuation declines for Acura, Buick GMC, Cadillac, Ford, Infiniti, Lincoln, and Volvo in the next 12 months. 

“While it is worth noting that a minority of dealers in the survey expect a decline in valuation, and fewer dealers – across all franchises – expect values to increase, most dealers remain optimistic about the year ahead and believe their franchises will retain their record valuations into 2023,” continued Ryan Kerrigan. “These results demonstrate the resilience of the dealer business model and the sustainability of elevated profits, even in the face of more negative economic indicators.”

Additional Franchise Valuation Highlights from the 2022 Kerrigan Dealer Survey:

·       Hyundai and Kia surpassed Toyota for the first time to become the franchises most expected to increase in value over the next 12 months – a dramatic 26-percentage point shift since 2019, when just 19% of dealers surveyed projected their valuations to increase. This improvement is consistent with Kerrigan Advisors’ positive outlook for Hyundai and Kia in the Second Quarter Blue Sky Report: blue sky multiples for the franchises have increased 42% since 2020. 

·       Ford saw the largest increase in dealers expecting the franchise to decline in value (18 percentage points) and the biggest drop in the percentage of dealers projecting an increase in value (24 percentage points) compared to 2021. These results are consistent with Kerrigan Advisors’ negative outlook on Ford’s blue sky multiple and dealer concerns about the future profitability of the franchise with electrification. Kerrigan Advisors noted that the firm finds smaller dealers are the most negative on Ford, while larger groups are less negative and, in select cases, positive about Ford’s future.

·       Honda had fewer dealers projecting an increase in value in the next 12 months, coming in second to Ford in terms of the drop in dealers projecting an increase in value compared to 2021. Honda also saw an eight percentage point increase in the number of dealers expecting a decline in value.  

·       Nissan was the only franchise to see an improvement over 2021 results, with an eight percentage point decrease in the number of dealers expecting the franchise to decline in value and no change in the percentage of dealers projecting an increase, retaining the brand’s improved metrics from the 2021 survey. This improvement is consistent with Kerrigan Advisors’ reported improvements in Nissan’s blue sky multiple, up 33% since 2021.

Methodology

The data for The Kerrigan Dealer Survey was gathered from Kerrigan Advisors’ annual survey of auto dealers in conjunction with the issuance of The Blue Sky Report®. The Kerrigan Dealer Survey is based on over 600 responses from franchised auto dealers in Kerrigan Advisors’ proprietary dealer database. Responses were collected from June 2022 to October 2022.

·       To download the full Kerrigan Dealer Survey report, click here.

·       To download a preview of The Blue Sky Report®, published by Kerrigan Advisors, click here. 

·       To access The Kerrigan Index™, click here.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. 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. Kerrigan Advisors has represented on some of auto retail’s largest transactions and advised on the sale of more top 150 Dealership Groups, than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723

Sale of two Toyota and two Lexus dealerships marks the 170th transaction led by Kerrigan Advisors, the leading advisor to Toyota and Lexus dealers nationwide since 2015

Incline Village, NV – November 1, 2022 –– Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Spartan Auto Group and the Criscuolo family in its sale of Toyota and Lexus dealerships in Central and Southeastern Michigan: Spartan Toyota in Lansing, Wolverine Toyota in Dundee, Lexus of Ann Arbor, and Lexus of Lansing. The dealerships were sold to the Germain Automotive Partnership (Spartan Toyota, Wolverine Toyota, Lexus of Ann Arbor) and Serra Automotive (Lexus of Lansing). Serra Automotive is the 12th largest US automotive group. The transactions mark the 12th & 13th Lexus and 19th and 20th Toyota dealerships sold by Kerrigan Advisors since 2015, making the firm the leading sell-side advisor to Toyota and Lexus dealers in the industry.

“It was our honor to work with the Criscuolo family on this generational transaction,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “The Criscuolos have been prominent representatives for Toyota and Lexus in Michigan since the 1980s and were visionary partners for these OEMs in the Upper Midwest. Rosario Criscuolo will forever be remembered as a pioneer in automotive retail in the state of Michigan. These transactions further confirms the depth of interest amongst growing dealer groups for adding Toyota and Lexus dealerships to their portfolios.”

Established in 1984, Spartan Auto Group has become an integral part of the communities it serves, thanks to the values instilled by founder Rosario Criscuolo. The group’s legacy of high performance is evidenced by its award-winning history: Spartan Toyota has won Toyota’s prestigious President’s Award 10 times by excelling in sales satisfaction, service satisfaction, market share attainment, vehicle delivery excellence and employee training certification.

“Our father taught us to focus on relationships. His credo was ‘relationships, not salesmanship.’ That’s what made doing business at our dealerships such a special and memorable experience,” said son and co-owner Derek Criscuolo. “We are grateful to have experienced such a positive working relationship with Kerrigan Advisors whose comprehensive, focused and sensitive approach throughout the process ensured that all our family’s goals and objectives were met.”   

Rosario Criscuolo’s personal approach to car sales and service helped to create a uniquely Michigan feel to Spartan Auto Group dealerships, whether in Ann Arbor, Dundee, or Lansing. “Our father created a small town feeling in all of our stores, and that was true even in dealerships that served larger cities like Lansing,” said daughter and co-owner Deanna Criscuolo. “That family feeling of comfort and belonging is his legacy, and we’re grateful that with Kerrigan Advisors’ support through every phase of the transaction process - from sale preparation and marketing to negotiations and closing - that legacy will be successfully passed on to Germain and Serra, both highly regarded Midwest dealership groups.” 

Toyota and Lexus are the most sought-after franchises by buyers in today’s active buy/sell market, according to Kerrigan Advisors’ second quarter Blue Sky Report. Toyotas and Lexus’ industry-leading sales per franchise, robust profitability, and strong dealer/OEM relations make these franchises highly attractive investments for most growing dealer groups. Kerrigan reports that nearly as many Toyota franchises have traded hands in the first half of 2022 as Chevrolet, Ford and Chrysler, Jeep, Dodge, and Ram (CJDR) franchises, despite having less than half of the number of US franchises. Also, Lexus has the highest sales per franchise of all luxury franchises, outperforming BMW and Mercedes by 31% and 46% respectively, and the fewest number of dealers in its network for top luxury brands, resulting in a highly profitable and valuable franchise network.

“We were proud to lead these transactions for Spartan Auto Group and guide them to well-established buyers with strong ties to the region,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The success of these dealerships is a tribute both to the Criscuolo family and to the power of the Toyota and Lexus brands, illustrating how the combination of decades of dedication to building the business, exceptional dealer/OEM relationships, and a right-sized franchise network results in high valuations.”

The transactions mark the 167th, 168th, 169th, and 170th dealerships sold by Kerrigan Advisors since 2015, bringing the total number of franchise sales they have led in 2022 to 40, and marking their 8th multi-dealership transaction for the year.

To contact Kerrigan Advisors, the most active sell-side advisor on higher value transactions in the auto retail industry, click here.

About Kerrigan Advisors 

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers in the US. The firm advises auto dealers nationwide, enhancing value through the lifecycle of growing, operating and monetizing their businesses. Kerrigan Advisors has had the honor of representing the industry’s largest transactions, including more Top 150 Dealership Groups than any other firm in the industry. Led by a team of veteran industry experts, the firm does not take listings, rather Kerrigan Advisors develops a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors’ sell-side advisory and capital-raising services, the firm also provides a suite of consulting services including growth strategies, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate analysis.

Kerrigan Advisors publishes The Blue Sky Report®, which is the auto industry's most comprehensive and authoritative quarterly report of dealership buy/sell activity and franchise values, received by nearly 10,000 industry participants in 35 countries. To register to receive The Blue Sky Report®, click here. Kerrigan Advisors also publishes The Kerrigan Index™, the only monthly report tracking the seven publicly traded auto retail companies. To access The Kerrigan Index™, click here.

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com), mWEBB Communications, 949-307-1723