Orlando-area dealership sold to Morgan Automotive Group, marking the 155th Kerrigan-led dealership sale since 2015

Incline Village, NV – June 8, 2022 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Fuccillo Automotive Group in the sale of Fuccillo Kia of Clermont to Florida’s Morgan Automotive Group, one of the fastest growing and largest private dealership groups in Florida.

With the transaction, Kerrigan Advisors has now sold six Florida dealerships on behalf of the Fuccillo family since December 2019; it’s also the 155th sale led by the firm since 2015. Kerrigan Advisors is the most active auto dealership sell-side advisor in the state of Florida.

Founded over 30 years ago, the Fuccillo Automotive Group built a reputation for friendly service that resulted in a commanding position in the highly sought-after Florida car market. Fuccillo Kia of Clermont, located in the Orlando metropolitan area, is among the most desirable stores in one of the fastest growing markets in the US: Orlando is the 3rd largest metro in Florida, 4th largest in the Southeast, and 22nd largest in the United States -- and among the top areas nationally for job growth, career opportunity, quality of life, and education. Clermont itself is one of the 20 fastest growing cities in the region.

The acquirer, Morgan Automotive Group, is ranked in the top ten by Automotive News in its Top 150 Dealership Groups list, with 53 Florida locations in Tampa, Gainesville, Ocala, Lake City, Jacksonville, Sarasota, Naples, Fort Myers, Brandon, New Port Richey, Orlando, and the surrounding areas.

“Florida dealerships are among the highest volume and most profitable in the nation,” said Gabe Robleto, Vice President of Kerrigan Advisors. “Given that fact, we were humbled to once again advise the Fuccillo family, this time on the Fuccillo Kia of Clermont transaction. We’re proud of the work we’ve done in helping the family monetize over 30 years of dedication, hard work and community investment.”

“Representing the Fuccillo organization again was a real honor,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Demand for dealerships remains at record high levels given the industry’s robust profitability and attractive business model. Kerrigan Advisors expects 2022 to be at or above 2021’s record level for transactions, as valuations remain high and dealers continue to allocate record amounts of capital to acquisitions.”

Kerrigan also noted that demand for dealerships in Florida is the highest in the nation. One out of every 3 buyers in Kerrigan Advisors’ proprietary buyer database is seeking a dealership in Florida, resulting in blue sky multiples one to two turns higher, as compared to the published national multiples in The Blue Sky Report. Kerrigan also commented that demand for Kia dealerships is on the rise and this transaction reflects the franchise’s increased blue sky multiple in the most recent Kerrigan report.

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

Kerrigan Advisors Media Contact:

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

Unprecedented 383 transactions completed in 2021, representing 830 franchises, nearly three times the pre-pandemic average, according to The Blue Sky Report® by Kerrigan Advisors, which predicts blue sky values will continue to hit new records in 2022 as earnings skyrocket in the first quarter, super-charging industry consolidation

Incline Village, NV – April 4, 2022– The auto dealership buy/sell market set new records again in 2021 as the continuing, and transformative, impact of the pandemic drove change across the auto dealership business model, according to the just-released Blue Sky Report by Kerrigan Advisors. Unprecedented dealership earnings and blue sky valuations in 2021, says the report, helped fuel a historic 383 completed transactions in 2021, a 32.5% increase from 2020’s prior record and a 71.7% increase over the 2015-2019 pre-pandemic average[1]. Of note in this pivotal year for the auto industry, the public auto retailers were especially acquisitive, adding 246 dealerships, compared to just 29 in 2020, a shift that, according to the report, indicates a quickening of industry consolidation in the coming years.

Dealership buy/sell activity accelerated throughout 2021, with 158 transactions completed in Q4 alone, more than three times the pre-pandemic fourth quarter average. The transactions completed in 2021 represented 830 franchises, more than in any prior period, with 33% of the transactions representing multiple franchises.

“Auto retail experienced a ‘black swan’ moment in 2020, the results of which continued to transform the industry throughout 2021,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The pandemic was a catalyst as shrinking new vehicle inventories and rising consumer demand resulted in one of the most extreme supply/demand imbalances in auto retail history. Dealers leveraged their new pricing power while also reducing expenses and enhancing employee productivity, resulting in record dealership profits and dramatically increased operational efficiency. All of which led to the high velocity of dealership transaction activity in 2021.”

According to The Blue Sky Report® by Kerrigan Advisors, auto retail’s systemic transition from a local to a national marketplace, super-charged by the digitization brought on by COVID-19, accelerated consolidation by dealerships looking to expand and scale their businesses. In addition, the move to electrification and Tesla’s proven success with its virtual sales model fast-forwarded auto retail’s shift to a digital sales model – one less reliant on human capital and less dominated by technology. 

“The once ‘impossible’ online vehicle sale became the “possible” as a result of the pandemic,” continued Kerrigan. “This accelerated auto retail’s systemic transition from a local to a national marketplace, the consequences of which will be long-lasting, particularly for private, family-run dealerships. Kerrigan Advisors expects digital retailing, along with OEMs attempts to go direct-to-consumer, will stimulate further industry consolidation into 2022.”

According to the report, although private buyers dominated the buy/sell market, with a 71% share, the most notable move in the 2021 buyer pool was the acquisition activity by the public consolidators who grew their buy/sell market share to 29%, spending a record $9.56 billion in 2021, over 7 times their pre-pandemic average between 2014 and 2019.

The success of the publics’ acquisition strategy is further reinforced by The Kerrigan Index™ of the largest publicly traded auto retailers which traded above 1,000 for 201of 252 trading days last year, with each public hitting an all-time record high stock price during the year. The report notes that with the publics’ stock prices at these elevated levels, more acquisitions are accretive to earnings and thus they increased their capital allocation to acquisitions.

“The activity by the publics in 2021 represented a dramatic about-face and a new record for these companies,” said Ryan Kerrigan, managing director of Kerrigan Advisors. “The pandemic made clear that scale and a national platform will be clear differentiators for auto retailers in the future, particularly with their digital platforms. As a result, these companies shifted their focus from incremental “tuck-in” investments to major group expansion that meaningfully enhanced their geographic reach and added billions in revenue to their topline.”

Another significant buy/sell market change was the reduction in the domestic’s buy/sell market share to 46%, relative to their franchise market share of 66%. By contrast, import franchises saw their buy/sell market share soar to 54%, with Toyota hitting a new high of 7.7% - the highest level ever recorded by an import franchise. Kerrigan Advisors attributes Toyota’s rise to buyer confidence in the OEM’s partnership business model with its dealers, relative to the strained dealer relations with domestic OEMs, such as Ford and GM.

“We are seeing more buyer skepticism about Ford’s and GM’s plans to go direct-to-consumer which may lead to a decline in buyer demand for these franchises in the future. By contrast, the demand for Toyota franchises is as high as we have ever seen it,” continued Ryan Kerrigan. “Buyers believe an investment in a Toyota franchise will last the test of time because Toyota partners with its dealer network. Whatever the future holds, buyers feel very confident it will be a “win/win” for Toyota and its dealers.”

2022 Buy/Sell Trends

Kerrigan Advisors has identified the following three important trends which it expects to meaningfully impact the market in 2022.

·       Buyers base blue sky on projected future earnings, rather than historical norms.

·       OEM electrification plans not factored into 2022 dealership valuations.

·       Expected changes to the legacy auto retail business model drive more sellers to market.

Blue Sky Multiple & Outlook Adjustments

Given the tremendous transformation in auto retail in 2021, and expectations for future changes with electrification and digital retailing, Kerrigan Advisors made several adjustments to its blue sky multiples and multiple outlooks.

“Uncertainty generally creates greater volatility in a business’ valuation and the more uncertain buyers are regarding a franchise’s future earnings, the lower the blue sky multiple they are willing to pay. With this in mind, Kerrigan Advisors downgraded our outlooks on the Chevrolet, Ford, and Buick GMC franchises to negative from steady,” said Erin Kerrigan. “These domestics are flirting with new business models for their vast dealer networks and the unknowns associated with these changes is adding a level of risk to their proforma earnings, which may reduce their multiples in the future.” 

In addition to the changes in the outlook for Ford and General Motors, Kerrigan Advisors made the following changes to the fourth quarter 2021 blue sky multiples.

·       Reduced Chevrolet’s low-end multiple from 3.75 to 3.5, in line with its domestic competitors.

·       Increased Hyundai’s and Kia’s low-end multiples from 3.5 to 3.75 and high-end multiples from 4.5 to 4.75.

·       Increased Nissan’s low-end multiple from 2.5 to 3 and high-end multiple from 3.5 to 4.

·       Increased Porsche’s low-end multiple from 7.5 to 8.

·       Increased Lexus’ low-end multiple from 7 to 7.5.

·       Decreased Audi’s low-end multiple from 7.0 to 6.75 and high-end multiple from 8.0 to 7.5.

Highlights from the Q4 2021 Blue Sky Report® by Kerrigan Advisors include:

·       158 dealership buy/sell transactions were completed in the fourth quarter.

·       383 transactions were completed overall in 2021, a 32.5% increase from 2020’s prior record and a 71.7% increase over the 2014-2019 pre-pandemic average. 

·       A record 126 multi-dealership transactions were completed in 2021, representing 33% of the total market, almost double 2020’s 73 multi-dealership transactions.

·       Import non-luxury franchises increased their buy/sell market share to 36% in 2021, primarily at the expense of the domestics.

·       Domestics reduced their buy/sell market share to 46%, substantially below their franchise market share of 66%.

·       Ford had the highest buy/sell market share of the domestics in 2021 at 11.4%; however, Kerrigan Advisors expects demand for Ford franchises to decrease in 2022.

·       Toyota continued to have the highest import non-luxury buy/sell market share at 7.7%, the most ever recorded for an import franchise.

·       Lexus’ buy/sell market share declined from 3.8% in 2020 to 1.3%, potentially a result of limitations Lexus places on franchise ownership.

·       The largest public dealership groups grew their buy/sell market share to 29% in 2021, increasing their dealership count by 246 in 2021 from 29 in 2020, a dramatic increase from prior years.

·       The publics spent a record $9.56 billion on dealership acquisitions in 2021, 758% more than their pre-pandemic average.

·       Lithia and Asbury acquired 80 and 67 dealerships, respectively in 2021, more than their competing publics.

·       The Kerrigan Index™ surpassed the 1,000 mark in March 2021 and continued in record territory throughout last year. Since March 2020, the Kerrigan Index has outperformed the S&P 500 by nearly 155%.

·       Private buyers continue to dominate the buy/sell market taking 71% market share.

·       2021 was another record earnings year for dealers with average revenue of $70.4 million, and pre-tax profits almost doubling from $2.1 million in 2020 to an impressive $4.1 million in 2021.

·       Average dealership revenue per employee rose to $1.1 million in 2021 compared to $879K in 2019.

·       The publics’ average SG&A as a percentage of gross profit dropped to 61% in 2021, driving record public profitability.

·       Average dealership blue sky and real estate values increased to $22.9 million in 2021, from $19.2 million in 2020. 

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. 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

[1] Source: The Banks Report, Automotive News, Kerrigan Advisors’ Research

Earnhardt Buick GMC and Earnhardt Mazda of Las Vegas sold to Utah-based Jerry Seiner Dealerships marking the 151st dealership sale led by Kerrigan Advisors since 2015

Incline Village, NV – March 3, 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 Buick GMC and Earnhardt Mazda in Las Vegas to Utah-based Jerry Seiner Dealerships. Earnhardt Auto Centers is one of the largest, family-owned dealership groups in the US, and was named by Automotive News as the 23rd Largest Dealership Group in the US by 2020 new unit sales. 

“The sale of these stores was not an easy decision for our family, but it was the right one as we increase our focus on our highly successful core group of stores in Arizona. Once again, Kerrigan Advisors not only identified an excellent new owner for the stores, but they also ensured a smooth, harmonious transaction,” said Dodge Earnhardt, President of Earnhardt Auto Centers. “We are very grateful to the Kerrigan Advisors team, especially Erin Kerrigan and Marie Brashears, for their hard work to ensure this sale was a success.”

“It was an honor to represent the Earnhardt family and work with their executive team again,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “We were pleased to identify the right buyer for the Earnhardt’s valuable Las Vegas dealerships. The Jerry Seiner executive team, and owner Chris Hemmersmeier, recognized the value of entering the Las Vegas market with these franchises, and the opportunity the city’s tremendous economic expansion offers for continued sales growth.” 

Las Vegas is fertile territory for automotive dealerships: Nevada’s auto retail market has grown 65% since 2008, and now totals $8.3 billion in overall dealership revenue. Las Vegas is home to 2.3 million people, is the 4th fastest growing MSA by population since 2017 and is one of the fastest growing metros in the US. Furthermore, Nevada is regarded as one of the most pro-business states in the US due to its business friendliness, low taxes and attractive operating costs.

“The Earnhardt dealerships were sold in a very competitive buy/sell landscape where there is high buyer demand particularly in growth markets. Las Vegas is just that – experiencing tremendous expansion, as well as being business-friendly,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “In fact, the Centennial market, where Earnhardt Buick GMC and Mazda Las Vegas are located, is one of the highest volume auto markets in Las Vegas. We are confident the Jerry Seiner group will carry on the Earnhardt’s legacy of success with these franchises.”

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 2021 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

Northridge Toyota and Toyota of Santa Barbara sold to Van Tuyl Companies, Puente Hills Toyota sold to Kaminsky Automotive – marking 149th dealership sale led by Kerrigan Advisors

Incline Village, NV –February 8, 2022 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Hitchcock Automotive in its sale of three high-volume Toyota dealerships in Southern California. 

The sale of Northridge Toyota and Toyota of Santa Barbara to Van Tuyl Companies, and Puente Hills Toyota to Kaminsky Automotive, marks the 149th dealership sale led by the Kerrigan Advisors team since 2015. Kerrigan Advisors, which focuses exclusively on sell-side representation, is the most active sell-side advisor on the highest value transactions in the auto retail industry and has advised on the sale of 17 Toyota dealerships in the last seven years, more than any other firm in the industry.

Hitchcock Automotive has a long and distinguished legacy in southern California. The group was founded in 1971 by industry legend Frederick “Fritz” Hitchcock, who passed away in 2021. Hitchcock began selling Toyotas in 1976, building his Toyota dealerships to some of the top volume stores in their markets. He was a very active advocate in the industry for free trade and lower tariffs. His long record of service included roles as chairman of AIADA's board of directors, who named its Grassroots Leadership Award after him, a co-founder of the Automotive Free International Trade Political Action Committee, president of the California New Car Dealers Association and chairman of the Toyota and Mazda national dealer councils, among many others. 

“These dealerships, in so many ways, represent my dad’s extraordinary legacy. It is a bittersweet moment to announce the sale of the Hitchcock dealerships, as we have been a family business for decades. I am thankful to Kerrigan Advisors for running such a seamless sale process for our family,” said Ted Hitchcock, son of Fritz Hitchcock and Partner of Hitchcock Automotive.

“It was very important to the family that we found the right new owners with the vision to continue our dealerships’ record of excellence, success and service in their communities,” said Howard Hakes, President of Hitchcock Automotive. “When the time came to decide to sell, Kerrigan Advisors was our first call. The firm’s deep experience with the Toyota brand, their intelligence on buyers, ability to quarterback a multi-dealership transaction and their attention to every detail made them the perfect advisors to assist our family.”

“It was a sincere honor to represent the Hitchcock family in this important transaction,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Fritz Hitchcock was a larger than life presence in auto retail, and he will be long remembered for his commitment to our industry. We wish the Hitchcock family all the best as they transition these highly attractive dealerships to Van Tuyl Companies and Kaminsky Automotive.”

Northridge Toyota and Toyota of Santa Barbara are the highest volume dealerships in their submarkets and represent some of Larry Van Tuyl’s first acquisitions since selling Van Tuyl Group to Berkshire Hathaway in 2014. Puente Hills Toyota, which has been the #1 volume new car dealership in Puente Hills for over 30 consecutive years, will join Honda and Toyota of El Cajon as part of Kaminsky Automotive which is owned by brothers Greg and Gary Kaminsky.

“Toyota is a powerful brand nationwide and particularly in Greater Los Angeles, which is one of the largest car markets in the country. In addition to Toyota’s strong market share, Toyota’s franchises are sought after due to their consistently high profitability and Toyota’s partnership business model with its dealers,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. 

Kerrigan noted that Toyota is consistently ranked as one of the top brands by dealers in the NADA Dealer Survey and by buyers in Kerrigan Advisors’ proprietary buyer database. The brand has also held the #1 spot as the most valuable car brand for seven years running, according to BrandZ’s Top 100 Most Valuable Global Brands. As the top-selling brand in LA County, Toyota boasts six of the top 15 best-selling models in the LA market.

“The Hitchcock Automotive transactions are compelling evidence of Toyota’s brand equity, particularly in Southern California – in fact, Toyota’s LA County market share is 33% higher than Toyota’s national market share, with the highest growth in market share of all brands,” continued Kerrigan. “We are proud to have helped Hitchcock Automotive with a triple sale in this fast-moving buy/sell market and are confident that these dealerships are well-positioned for a future of continued growth and success, consistent with Fritz’ impeccable legacy.”

Legal counsel for Hitchcock Automotive was the Los Angeles automobile dealer law firm Manning, Leaver, Bruder & Berberich who has represented them for over forty years.

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 2021 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

Kerrigan Advisors projects over 350 completed transactions for 2021; historic market velocity driven by high valuations and unprecedented capital access resulting from record revenue and profitability

Incline Village, NV – December 16, 2021 – The auto dealership buy/sell market is on track for another record year as it continued its momentous pace in the third quarter according to the just-released Third Quarter 2021 Blue Sky Report® by Kerrigan Advisors, the industry authority on dealership valuation and buy/sell trends. In the third quarter, there were 81 dealership buy/sell transactions completed for a total of  225 transactions[1] for the first three quarters of the year, a 21% increase over 2020’s previous record. Kerrigan Advisors projects that 2021 will finish with over 350 transactions, a new industry high.

The increases in the Q3 buy/sell market were directly related to the industry’s continued historic record profits and revenue: in the last four quarters, the average dealership saw revenue rise to new highs and earnings increase 168% higher than 2019.

“Month after month of record profits is driving the velocity of this historic buy/sell market, increasing valuations and fueling an unprecedented rise in capital availability,” said Erin Kerrigan founder and managing director of Kerrigan Advisors. “Today, most dealers’ cash accounts are awash in more profit than they could have dreamed of in a single year. This, combined with low inventory levels and minimal floorplan, is resulting in a tremendous deleveraging of dealers’ balance sheets enabling them to access larger amounts of debt to finance major expansion on attractive terms.”

Kerrigan pointed out that despite 2021’s record profits, the vast majority of dealers expect profits to rise even further over the next 12 months[2], as inventory remains constrained and consumer demand remains high. This has made dealers bullish on growth with 77% planning to acquire one or more dealerships over the next 12 months. 

“Dealers have re-engineered their business model, accomplishing record profits with fewer employees and less operating expense. As quarter after quarter proves the advantages of today’s more efficient model, dealers are shifting from a “more is more” mentality to a “less is more” perspective for both employees and inventories, distancing themselves from auto retails’ antiquated pre-Covid economic architecture of less productive employees and an oversupply of inventory,” said Kerrigan.

Consistent with the industry’s positive profit outlook for 2022, the Kerrigan Index of the seven publicly traded auto retailers hit new records through the end of the third quarter, up 39.8% year-to-date, as it continued to outperform the S&P 500 Index by over 76%.

The publics were major players in the explosive buy/sell market with their spending on acquisitions coming in at a record $2.7 billion in the first three quarters of 2021, surpassing 2020’s full year record, and putting 2021 on track to be the most acquisitive year for the publics on record. Kerrigan Advisors projects their acquisition spending for 2021will reach over $7 billion. 

“This is a remarkable number which will surely cement 2021 as the most acquisitive year on record for the public acquirers,” said Ryan Kerrigan, managing director of Kerrigan Advisors. “Wall Street is rewarding these companies with higher valuations believing that an investment in the consolidation of auto retail is one that will pay future dividends. Since Wall Street is paying a price premium for the most acquisitive companies, it is not surprising to see all of them make US dealerships acquisitions in 2021.”

Kerrigan added that private buyers continue to dominate industry consolidation, albeit less than they did in 2020 given the publics’ renewed commitment to acquisitions, acquiring 86% of franchises sold in the first three quarters of 2021.

Multi-dealership transactions were also important factors in the first three quarters of 2021: an unprecedented 79 multi-dealership transactions were completed, representing 35% of the total buy/sell market. Among the franchises being acquired, import non-luxury franchises continue to see increased market share relative to 2020, with 38% of the buy/sell market.

Multiple Outlook Adjustments – Toyota, Hyundai, Kia and Nissan Increase

For the third quarter of 2021, Kerrigan Advisors made positive adjustments to four blue sky multiples.

Toyota’s high-end blue sky multiple was increased from 7.0 to 7.25 with its outlook remaining positive.  “Our dealer survey highlighted the rising value of the Toyota franchise with the majority surveyed expecting the franchises to increase in value,” said Ryan Kerrigan. “This is consistent with our recent experience selling multiple Toyota dealerships. As auto retail enters a period of evolution, dealers are confident in Toyota’s future franchise value due to its supportive partnership with its dealer network.”

Kerrigan Advisors also increased Hyundai’s and Kia’s blue sky multiples on the high-end to 4.5 from 4.0 and on the low-end to 3.5 from 3.0 and moved their outlooks from steady to positive. Hyundai and Kia become the second and third highest ranked franchises by dealers in expectations for increased valuation, leapfrogging over last year’s survey leaders Subaru, Porsche, Honda, Mercedes-Benz and Lexus.

Nissan’s high-end blue sky multiple was increased to 3.5 from 3.0 and its low-end multiple to 2.5 from 2.25, as Nissan saw a significant improvement in the survey with 22% of dealers expecting Nissan to increase in value, compared to just 8% in 2020. Kerrigan Advisors kept Nissan’s multiple outlook positive as further increases may occur over the next 12 months with continued improvements in dealership profits.

2021 Buy/Sell Trends

Kerrigan Advisors identified the following important trends it expects to impact the buy/sell market into 2022.

• Sellers’ value expectations rise as pre-Covid earnings become less relevant to today’s business
• Valuation drivers for large groups differ from individual franchises
• OEM framework agreements create some limitations for the largest consolidators

Highlights from the Q3 2021 Blue Sky Report® by Kerrigan Advisors include:

• 81 dealership buy/sell transactions were completed in the third quarter.
• 225 transactions were completed for the first three quarters of 2021, a 21% increase over 2020. 
• Auto dealerships’ average earnings for the last four quarters were $3.8 million, more than double the pre-pandemic annual average.
• In Q3, blue sky values were up over 60% from pre-pandemic levels.
• 79% of auto dealers expect their profits to rise further over the next 12 months.
• 77% of auto dealers plan to acquire one or more dealerships over the next 12 months, only 3% plan to sell. 
• The Kerrigan Index is up 39.8% year-to-date, outperforming the S&P 500 Index by over 76%.
• 79 multi-dealership transactions were completed in the first three quarters of 2021, representing 35% of the total buy/sell market.
• Market share for import non-luxury franchises increased to 38% of the buy/sell market.
• The top 5 franchises expected (by dealers) to increase in value are all import non-luxury franchises: 1.Toyota, 2. Hyundai, 3. Kia, 4. Subaru, 5. Honda.
• The luxury franchise buy/sell market share dropped from 20% in 2020 to 16% in 2021 - possibly due to increased competition from Tesla, coupled with uncertainty about the future luxury business model .
• Domestics improved their buy/sell market share in the third quarter relative to the second quarter, with Chevrolet, Ford, Buick GMC and CDJR in the lead.
• Public auto retailers’ earnings increased 140%, versus 2020, to a record $4.5 billion in net income over the last four quarters.
• Public auto retailer spending on acquisitions was a record $2.7 billion in the first three quarters of 2021, surpassing 2020’s full year record.
• In Q3, the publics added a net of 95 franchises, 80 more than 2020. 
• Lithia and Asbury were the most acquisitive in 2021 and have the strongest valuation metrics in 2021.
• Private buyers dominate industry consolidation, representing 86% of all franchise acquisitions for the first three quarters of 2021.
• Kerrigan Advisors estimates that the average dealership real estate values rose to $11.9 million in the third quarter of 2021.
• Dealership rent expense reached a record $831K on a trailing twelve-month basis; however, high rent payments were offset by record gross profits: the rent-to-gross profit margin declined to 8.8%, the lowest level in over a decade.
• Rising rents are particularly evident in the luxury OEM segment at an average of over $1.3 million. Kerrigan Advisors expects real estate investment requirements will continue to be a factor in luxury dealers’ decisions to sell
• 61% of dealers expect the value of their dealership/dealership group to increase in the next twelve months.
• For the third quarter of 2021, Kerrigan Advisors made four positive adjustments to its blue sky multiples: for Toyota, Hyundai, Kia and Nissan.

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. 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

[1] Source: The Banks Report, Automotive News, Kerrigan Advisors’ Research

[2] According to the Kerrigan survey. https://www.kerriganadvisors.com/the-kerrigan-dealer-survey/

Sale of third highest volume Honda dealership in Illinois to Gerald Auto Group  

Incline Village, NV –December 8, 2021 – Kerrigan Advisors represented Continental Motors in its sale of Continental Honda of Countryside, Illinois to Chicago-based Gerald Auto Group. This sale marks the third transaction for Continental Motors that Kerrigan Advisors has represented since 2019 and the 143rd dealership sale led by the Kerrigan Advisors team since 2015. Kerrigan Advisors, which focuses exclusively on sell-side representation, is the most active sell-side advisor on the highest value transactions in the auto retail industry.

Continental Honda is the third highest volume Honda dealership in Illinois and has won Honda’s President’s Award eight times since 2011, most recently in 2020. 

“Once again, Kerrigan Advisors put their unique insights about our market to work and found us the right buyer. After their excellent work on our previous transactions, they were the obvious choice to shepherd us through this one,” said Jay Weinberger, Owner, Continental Honda. “The team at Kerrigan Advisors understands the importance of community, tradition and family when it comes to a sale like this, and they put that into action with a buyer who exemplifies the importance of service to customers and employees alike. And, as always, Kerrigan Advisors’ responsiveness and attentiveness, every step of the way, was best-in-class, resulting in a seamless transaction.”

Continental Motors Group, founded in 1961, is one of the oldest and longest-running family-owned dealership groups in the Chicago area. Brothers John and Herman Weinberger opened their import repair shop in Lyons, Illinois in 1961 and quickly became new car dealers with their first franchise, Triumph, in 1962. From that point on, the family business grew through the brothers’ legacy of customer support and service, ultimately transitioning to the next generation. 

“Honda is the #1 selling brand in Chicago, and Countryside is the 3rd highest volume auto retail market in Chicago, so this was an exceptional acquisition opportunity with much interest in the market. It was critical that Kerrigan Advisors identify the right buyer to match Continental Honda’s stellar reputation,” said Gabe Robleto, Vice President, Sell-Side Advisory of Kerrigan Advisors. “We are honored to represent Jay Weinberger again and to successfully manage his sale process to the Gerald Auto Group, a family-owned business with same values and goals for their business.”

“In 2021’s incredibly active buy/sell market, buyers are especially interested in high volume dealerships and top brands like Honda located in large auto retail markets like Chicago,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Our exclusive focus on the sell-side process means that all our market intelligence, analysis and consultation is steered to identifying a buyer whom our clients are completely comfortable with -- in every aspect of the sale. We are proud to have found that buyer for Jay Weinberger, and helped guide this high value transaction to a successful conclusion.”

David Blum, Scott Wasserman, Larry Eiben and Jerrod Bevan of Akerman, LLP served as legal counsel to the seller.

Kerrigan Advisors is the premier 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 2021 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 a leading sell-side advisor and thought partner to auto dealers in the US. 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 eight dealerships to Asbury Automotive Group marks the largest dealership group transaction in Denver’s history

Incline Village, NV – December 7, 2021 – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Stevinson Automotive, the largest privately-owned dealership group based in Denver, Colorado, in the sale of its eight dealerships to Asbury Automotive Group. The transaction includes Porsche Littleton, Lexus of Frederick, Lexus of Lakewood, Stevinson Toyota East, Stevinson Toyota West, Hyundai of Longmont, Stevinson Chevrolet and Stevinson Imports (Jaguar).

Founded in 1962 by Chuck and Pat Stevinson, Stevinson Automotive became a pillar of Denver’s auto retail market, starting with the acquisition of the group’s first Chevrolet dealership in Golden, Colorado, followed by the addition of two Toyota dealerships, as well as a Jaguar and Porsche franchise. The group opened the inaugural Lexus dealership in Colorado in 1989 (one of the first 60 awarded in the US) and a companion Lexus franchise in 2006. In 2011, Stevinson acquired the Hyundai franchise in Longmont, Colorado. 

Stevinson built a long-standing reputation as a dealership group that always put the customer and community first. The group received numerous awards over its 59 years in business including Elite of Lexus (36 times) and Toyota President’s Award (14 times). Kent Stevinson, President of Stevinson Automotive and one of Chuck and Pat Stevinson’s eight sons, served on Lexus’ National Dealer Council and was inducted into the Colorado Business Hall of Fame in 2020, the Colorado Automotive Hall of Fame in 2021, and was Colorado’s nominee for the TIME Quality Dealer Award in 2000. 

“My family built our business on the simple principle of treating every customer as if they were a guest in our home and delivering a little more than expected. For a family business like ours with long-term roots in the Denver community, making the decision to sell, and identifying the right buyer, were critical to me and my brothers.” said Kent Stevinson. “Being in Kerrigan Advisors’ capable hands to lead us through the sale process was priceless. Our sale would not have happened as efficiently, or as smoothly, without the relentless attention to detail and professionalism from Kerrigan Advisors’ team, especially Erin Kerrigan, Marie Brashears and Mercedes Hendricks. For any group considering a sale, I strongly recommend Erin and her team.”

“Kerrigan Advisors was honored to lead the Stevinson sale, knowing how important this transaction was to the family and their legacy in the Denver market. We identified Asbury as the ideal buyer to carry on our client’s record of success and commitment to customer service and employees,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Stevinson has long been considered one of the most valuable private groups in Colorado. Identifying a buyer who appreciated that value and could complete a transaction of this size was the goal for this transaction. We found that buyer in Asbury.”

“The Denver market is one of the most economically vibrant in the US and an ideal market for strong automotive brands, such as those represented by Stevinson Automotive,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Dealerships in the Denver area, particularly groups anchored by top franchises such as Porsche, Lexus and Toyota, are in very high demand by major consolidators. In today’s active buy/sell market, it was critical to achieve a closing by the end of 2021. We were pleased to achieve this goal on behalf of the Stevinson family.”

Stephen Dietrich of Holland & Knight served as legal counsel to Stevinson Automotive.

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 2021 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

Positive momentum in auto retail and buy/sell market will continue in 2022, according to the recently-released 2021 Kerrigan Dealer Survey: 61% of dealerships expect an increase in their valuation, 79% expect profits to rise and 77% expect to acquire more dealerships over next 12 months

Incline Village, Nevada, November 29, 2021 – Auto dealers’ optimism about the valuation of their dealerships has doubled year-over-year, according to the newly-released, 2021 Kerrigan Dealer Survey, with the vast majority expecting their already record profits to continue to rise in 2022. 

The survey, which was fielded by Kerrigan Advisors, is designed to gauge auto dealer sentiment about the future value of their businesses, as well as their perspective on franchise valuations and acquisitions. Sentiments about the year ahead, from the 825 dealers queried, align closely with Kerrigan Advisors’ prediction that the 2022 dealership M&A market will surpass 2021’s record pace and that valuations will rise further for most franchises over the next twelve months. 

Sixty-one percent of dealers expect an increase in the value of their dealership/dealership group in the next 12 months, nearly double last year’s results. Only 6% expect a decline. The survey also produced overwhelming evidence of just how bullish today’s auto dealers are: 94% expect their profits to continue, and 79% expect them to rise even further. 

“The ongoing momentum in auto retail is truly extraordinary and underscored by the fact that dealers expect their profits, already up over 150%, to continue to rise,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “These survey results offer compelling evidence of the strength of the auto retail business model, despite inventory challenges and electrification risk. Dealers have re-engineered their businesses to thrive with modest vehicle supplies and deployed digital technologies to enhance productivity. Their bullish perspective on the value of their businesses certainly is a vote of confidence in the sustainability of today’s high profits going into 2022.” 

In the survey, seventy-seven percent of dealers said that they were anticipating acquiring one or more dealerships in the next twelve months, while just 3% plan to sell one or more dealerships.

“The industry’s focus on expansion is indicative of the scale required to succeed in the current auto retail marketplace and is consistent with today’s high level of M&A activity,” continued Kerrigan. “It also shows dealers are looking to reallocate their profits back into the industry because they believe in its future. As more dealers seek to grow than exit, Kerrigan Advisors expects 2021’s seller’s market to persist into 2022, driving valuations even higher next year, consistent with our survey results.”

Earlier this year, Kerrigan Advisors’ Q2 2021 Blue Sky Report showed that blue sky values had risen more than 40% versus pre-pandemic levels, consistent with the findings in the 2021 dealer survey. 

Dealers also shared their opinions about the direction of specific franchise values over the next 12 months, pointing out potential winners, as well as franchises they felt would remain consistently valued – or suffer a decline.

Over 40% of surveyed dealers expect an increase in Toyota, Hyundai, Kia, Subaru, Honda, Lexus, and Porsche franchise values in the next 12 months.  Infiniti, Acura, Nissan, and Lincoln fared less well with 30% of surveyed dealers expecting their valuations to decline, although that is an improvement over last year’s 55%. Kia and Hyundai were the franchises with the highest percentage point improvement over last year (23 percentage points) from last year in expectation of rising valuations.

“The industry’s explosive profitability and positive earnings expectations for 2022 are driving dramatic changes in valuation expectations for most franchises compared to prior years,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Of particular note is how the survey highlights the value of the Toyota franchise, with 55% of dealers expecting that franchise to increase in value, despite already being one of the most valuable franchises in the market. This is reflective of Toyota’s partnership business model with its dealers and the importance of that partnership as the industry enters a period of evolution with electrification and digital retailing.”

Additional Franchise Valuation Highlights from the 2021 Kerrigan Dealer Survey:

·       Projected increases in franchise values are higher on average for Toyota, Hyundai, Kia, Subaru, Honda, Lexus, and Porsche in 2021 versus 2020, when no franchise achieved greater than 40% of dealers projecting an increase.

·       Toyota was the franchise most expected to increase in value by dealers at 55%.

·       Lexus ranked highest among luxury franchises, with 43% of dealers projecting a value increase.

·       Hyundai and Kia saw a 16-percentage point decrease in the number of dealers who expect their franchises to decline in value, versus 2020.

·       Ford improved 17-percentage points in the number of dealers who expect the franchise to increase in value; greater than Chevrolet and CJDR.

·       The top 5 franchises projected to increase did not include a luxury franchise for the first time, potentially due to increased competition from Tesla in the luxury segment.

·       The top 5 franchises projected to decrease – Infiniti, Acura, Nissan, Lincoln, and Cadillac – saw an 18-percentage point reduction in the number of dealers expecting their valuation to decline vs 2020’s survey.

·       Infiniti was the franchise most expected by dealers to decline in valuation at 55%.

Methodology

The data for The Kerrigan Dealer Survey is 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 825 responses from franchised auto dealers in Kerrigan Advisors’ proprietary dealer database. Survey responses were collected from June 2021 to October 2021.

·       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 11 Top 150 Dealership Groups in the US, more 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

Priority 1 sale marks the 21st group sale Kerrigan Advisors has represented since 2015

Incline Village, NV – November 11, 2021 – Kerrigan Advisors represented Baltimore, Maryland-based Priority 1 Automotive Group in its sale to AutoNation on November 8, 2021. The acquisition is one of the largest completed by AutoNation since 2018, and the largest on record in the Mid-Atlantic region. Kerrigan Advisors, which focuses exclusively on sell-side representation, is the most active sell-side advisor on larger transactions in the auto retail industry.

The sale included Porsche Towson, BMW of Rockville, BMW of Towson, BMW of Bel Air, MINI of Baltimore County, Jaguar Land Rover Hunt Valley, Audi Owings Mills, Acura of Hunt Valley and Frankel & Chesapeake Cadillac, as well as three collision centers located in Cockeysville/Hunt Valley, Rockville, and Towson.

“Kerrigan Advisors was the only buy/sell advisor I considered when my family decided the time was right for a sale. I have known Erin Kerrigan and her team for a long time and have always been impressed by their professionalism and hard-work on behalf of clients,” said Lou Cohen, President of Priority 1 Automotive Group. “Kerrigan’s expertise selling large multi-dealership groups like ours, combined with their keen understanding of the most active buyers in the industry, is the kind of intelligence that is critical in today’s buy/sell market. Kerrigan Advisors brought that to our transaction process, and more.” 

Prior to the transaction, AutoNation owned six dealerships in the Baltimore-Washington market. After the completion of this transaction, AutoNation will own over 40% of the luxury dealerships in the Baltimore market.

“We were honored to represent the Cohen family in the sale of their very valuable dealership group to AutoNation. This transaction was a natural fit for our firm, given our expertise in managing the complexities associated with large multi-dealership transactions and our knowledge of the Mid-Atlantic, where we maintain an office,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “We were grateful for the opportunity to identify a buyer who would continue the Cohen’s legacy of customer and community service in the Baltimore-Washington market.”

Priority 1 serves the Baltimore-Washington area, which is the 4th largest US region by population, with over nine million residents, and one of the most educated, high income-earning regions in the country.  Lou Cohen has led auto retail businesses in Baltimore-Washington since 1961 and has a record of success in the market. In 1979, Cohen acquired his first new car franchise, ABC Chevrolet, and ultimately added nine more franchises to his Heritage Auto Group before selling that group in 1997. In 2000, Cohen re-entered the new car business with the purchase of BMW of Towson, adding an additional eight top luxury franchises in the Baltimore-Washington market to become one of the largest luxury group’s in the Mid-Atlantic. After the sale, the Cohen family will continue to operate a leasing business and used car operation.

“Our family legacy in auto retail in Baltimore goes back to the 60s, so we did not take this sale process lightly,” said Marc Cohen, Vice President of Priority 1 Automotive Group. “With Kerrigan Advisors’ expert advice, knowledge of the top buyers for the Mid-Atlantic region and focus on exclusive sell-side representation, we were in excellent hands throughout the sale process. Their advice and guidance was invaluable.”

“Our family has grown Priority 1 strategically, adding the best luxury franchises to enhance the value of our group and better serve our luxury customer base in the Baltimore-Washington market,” said Alison Cohen, Vice President of Priority 1 Automotive Group. “Kerrigan Advisors understood the value of our luxury platform, including our group’s potential, and found the right buyer for us in AutoNation.”

“AutoNation’s purchase of Priority 1 continues the trend of the largest consolidators increasing their market share in major metros throughout the US, a trend that is not abating,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We expect 2022 to be as active a year as 2021, with more families, like the Cohens, deciding the time is right to monetize generations of hard work.”

Stephen Dietrich of Holland & Knight and Freddie J. Traub of Friedman & Friedman, LLP served as legal counsel to Priority 1 Automotive Group.

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 2020 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 a leading sell-side advisor and thought partner to auto dealers in the US. 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 11 Top 150 Dealership Groups in the US, more 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

Auto dealership buy/sell market on path to most active year in history – 320 transactions June 2020 to June 2021 – as limited inventory and more efficient practices send dealership profits soaring 164%; historic access to capital fuels demand, and blue sky valuations tick up more than 40% from pre-COVID levels.

Incline Village, NV - September 20, 2021 – The auto dealership buy/sell market has hit yet another historic high, with 320 transactions completed in the 12-month period since the economy re-opened in June 2020, according to the Second Quarter 2021 Blue Sky Report® by Kerrigan Advisors, the industry authority on dealership valuation and buy/sell trends. Mostly driven by today’s unprecedented dealership profits, values for auto dealerships were at record levels, reaching an average of $9 million of blue sky per dealership for Q2, with 2021 on track to be the most active buy/sell year in history.

There were 144 dealership buy/sell transactions in the first half of 2021, a 27% increase over the first half of 2020 and a record number for the period[1]. Kerrigan Advisors expects transaction activity to rise dramatically in the second half of the year as more sellers seek to complete their transaction before year-end to potentially lock in a lower tax rate and avoid a tax increase in 2022.

“Today’s activity level is a byproduct of the industry’s explosive profitability,” said Erin Kerrigan, Founder & Managing Director of Kerrigan Advisors, noting that in the first half of 2021, the average dealership earned a jaw-dropping $1.96 million, 164% more than the industry’s average between 2015 and 2019, with the average dealership achieving a record trailing-twelve month profit of $3.51 million.

“Even with the removal of PPP funds received in 2021, most dealerships are achieving profitability levels several times higher than historical averages. Dealerships currently provide an incredibly high ROE of over 57% on average, and dealers have more capital than they have ever had. This is fueling buyer demand that is well outstripping supply and creating a seller’s market, further heating up the market and increasing blue sky values,” said Kerrigan.  

The report also discusses the impact of the semiconductor chip shortage that continues to limit the supply of new vehicles. With the resurgence of COVID cases further disrupting the entire auto industry’s supply chain and impacting inventory availability and pricing, new and used vehicle prices are up 10.6% and 29.6% respectively since January 2020, the largest rise in an 18-month period.

Intersecting with these factors, according to the report, is robust consumer demand for new and used vehicles, spurred by access to quarantine savings and government stimulus, low borrowing costs and a growing appreciation for the safety and importance of personal mobility. This, combined with dealerships’ increasingly productive and efficient business operations, is leading to record gross profits per vehicle: more than double for new compared to pre- pandemic levels, with used vehicle gross profit per vehicle rising 79%. 

“Given the industry’s incredible profit performance over the last 12 months, and positive outlook for 2022 and beyond, we find most dealers are buyers, not sellers, and few are willing to accept the status quo,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Today’s dealers, both private and public, want to grow and have tremendous access to capital to do so.  Few alternative investments provide the risk adjusted returns available from dealership acquisitions.”

OEM Approval Process Increasingly Sluggish

A significant trend potentially impacting blue sky multiples, according to the Blue Sky Report, is the slow-paced OEM approval process as OEMs are inundated with transactions. Increasingly, OEMs are requiring more terms from buyers, including more stringent framework agreements and facility upgrades. 

“We expect the challenges of OEM staffing on buy/sell approvals to become a crisis issue in the fourth quarter, given the economic fallout of missing a 2021 close,” said Erin Kerrigan “The old adage ‘time kills deals’ is still alive and well. OEMs that take too much time to approve their buy/sells and subject the process to unnecessary red tape and restrictions will likely find a larger number of their buy/sells fall apart, ultimately leading to less buyer demand and potentially lower blue sky multiples for their franchises.”

Multiple Outlook Adjustments – CDJR, Nissan Up, Ford Down

Kerrigan Advisors did not adjust blue sky multiples in Q2, but did make changes to the outlook for certain franchises due to fluctuations in buyer demand. Chrysler Dodge Jeep Ram (CDJR)’s multiple outlook was upgraded from Steady to Positive. “Buyer demand for CDJR is on the rise as Stellantis defies the odds with higher vehicle inventory levels, resulting in impressive sales gains (32.4%) in the first half of 2021 and high sales per franchise (787 sales per franchise) in the last twelve months,” said Ryan Kerrigan.

Nissan’s multiple outlook was also upgraded, from Steady to Positive. “We expect to see an increase in Nissan’s multiples by the end of 2021,” continued Kerrigan. “Nissan franchises improved in sales and profitability this year with buyers once again interested in acquiring Nissan franchises, particularly in strong, high growth markets such as Florida, Texas, and Nevada. We saw this firsthand when Kerrigan Advisors represented on the sale of Fuccillo Nissan of Clearwater, Florida to Morgan Auto Group in August 2021.”

Kerrigan Advisors had one multiple outlook downgrade for the quarter, moving Ford from Steady to Negative.  “Buyer demand for Ford dealerships is on the decline, relative to its domestic competitors. Ford sales rose significantly less than its top competitor and dealers are skeptical of the ramifications for future dealer profitability of its imminent shift to a build-to-order model,” concluded Kerrigan.

2021 Buy/Sell Trends

Kerrigan Advisors identified the following three trends it expects to meaningfully shape the buy/sell market for the remainder of 2021 and into 2022.

·      Buyer pool of existing dealers expands as cash accounts rise and access to debt grows

·      Sellers become less flexible on valuation as their profits soar

·      OEMs are increasingly overwhelmed by 2021’s buy/sell volume and less flexible on framework terms

Highlights from the Q2 2021 Blue Sky Report® by Kerrigan Advisors include:

·      144 transactions were completed in the first half of 2021, a 27.4% increase over the first half of 2020 and a record number for the period.

·      320 transactions were completed over the last 12 months (June 2020 to June 2021), more than any 12-month period in recent history.

·      Including real estate, the average dealership’s enterprise value is approaching $21M, a 19% percent increase over 2019.

·      There were 51 multi-dealership transactions in the first half of 2021, a 96% increase as compared to 2020, representing 35.4% of the buy/sell market -- the highest percentage ever recorded during the first half of the year.

·      Average dealership blue sky values rose to another peak in the second quarter to $9M, up 42% from 2019.

·      More efficient business operations and higher gross profits contributed to increased dealership profits in the first half of 2021— an average of $1.96 million, more than any pre-pandemic 12-month period, leading to a trailing-twelve month profit of $3.51 million, 147% more than the pre-COVID average (2014-2019).

·      The Kerrigan Index™ continues to outperform S&P 500—up 1038% since 2009, outperforming the S&P 500 by 179%.          

·      Import franchises represent a disproportionate share of the buy/sell market at a combined 58% (41% non-luxury and 17% luxury), relative to their franchise 31% market share of just 34%.

·      The public auto retailers continued to allocate capital to acquisitions, spending a record $4.45 billion over the last four quarters.

·      In the first half of 2021, Toyota represented over 10% of the franchise buy/sells, in line with Ford’s, CDJR’s and Chevrolet’s buy/sell market share - impressive when considering that Toyota has only 1,238 franchises in the US, as compared to Ford’s 3,006, CDJR’s 2,461, and Chevrolet’s 2,924.

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 a leading 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. 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

[1] Source: The Banks Report, Automotive News, Kerrigan Advisors’ Research