Auto Dealership Buy/Sell Market Slows Slightly, Still on Pace for Sixth 200+ Transaction Year; Blue Sky Valuations Stabilize with Dealership Earnings Improvement

Buy/sell market continues strong year with 49 completed transactions in Q2 2019; global trade war brings investors to market; dealership business model proves resilience with increased gross profit, according to Q2 2019 The Blue Sky Report® by Kerrigan Advisors

Irvine, CA –September 9th, 2019 – The 2019 auto dealership buy/sell market stayed steady and on course for yet another 200+ transaction year in 2019, with 103 completed transactions year-to-date. According to the just-released Second Quarter 2019 Blue Sky Report® by Kerrigan Advisors, a decline in new vehicle sales spurred dealers to turn to their higher margin business segments, resulting in an increase in gross profit and earnings. 

“The buy/sell market moved at a slower pace during the second quarter,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Yet even with the second quarter’s decline, 2019 is tracking to be another 200+ transaction year – the sixth consecutive year at this elevated level. Kerrigan Advisors expects transaction activity to remain at today’s elevated pace through the remainder of 2019 and into 2020.”

Kerrigan noted that since 2014, an estimated 1,000 dealers have sold their businesses, representing 12% of the total dealer network. Sellers continue to come to market at a high rate, while the buyer pool grows with new capital seeking investment in auto retail thanks to a diversified and high-margin business model that hedges against an uncertain economy.

Despite recession fears, Kerrigan Advisors expects dealership buy/sell activity to remain strong for the remainder of 2019. “The global trade war has clearly caused uncertainty in the investment community, leading to a flight to higher quality, less risky assets,” said Kerrigan. “Auto retail is emerging as one of those asset classes. High net worth individuals, family offices and Wall Street investors recognize the counter cyclical measures dealers can take to sustain profitability, even when new car sales turn south. Auto retail’s nimble model makes the industry a highly attractive investment in a time of greater economic uncertainty.”

This year’s earnings increase, forecasted in Kerrigan Advisors’ prior Blue Sky Reports, highlights the strength and sustainability of the auto retail business model. The continued shift to higher margin profit centers such as used vehicle sales, F&I, and fixed operations also reflects the reported record earnings in the second quarter by public dealer groups. In their quarterly earnings calls, the groups noted their continued success augmenting new vehicle gross profits with record F&I income per vehicle sold. This is another indication of the industry’s ability to identify growing profit centers despite reduced new vehicle sales and gross margins. Indeed, in the first half of 2019, the industry’s average blue sky value reversed a four-year downward trend, driven by the first increase in average dealership profits since earnings peaked in 2015.

According to the report, in the first half of the year the number of multi-dealership transactions also declined. The rise in single dealership transactions may reflect “franchise pruning” that many organizations are currently undertaking. “Both the public groups and large private dealership groups are capitalizing on their ability to jettison underperforming dealerships and redeploy their capital into higher ROI investments in today’s active buy/sell market,” noted Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Among the franchises being acquired, domestics continue to grow their market share, because buyers are attracted to their lower blue sky multiples and higher expected ROI.”

In addition, the report identified the following three trends, which are expected to meaningfully impact the buy/sell market through the remainder of 2019 and into 2020.

- Improvement in dealership earnings steadies blue sky values
- Publics’ stock price appreciation portends future acquisitions
- Lower interest rates support an active buy/sell market

Highlights from the Second Quarter 2019 Blue Sky Report® by Kerrigan Advisors include:

- The buy/sell market moved at a slower pace in the second quarter, with 49 transactions completed.

- The Kerrigan Index™ is up 37.1% through July 2019. Wall Street investors increasingly believe an auto retail investment is a hedge against a potential recession.

- Average dealership earnings increased 1% over the trailing twelve months ending in June 2019, the first increase in dealership earnings since 2015.

- Despite a decline in new vehicle sales, dealers grew their higher margin business segments, resulting in an increase in gross profit and earnings.     

- Since 2014, fixed operations and used vehicle gross profits have increased 10.8% and 27.6%, respectively.  By contrast, new vehicle gross profits have declined 7.6%.

- Today, fixed operations and used vehicles represent 75.9% of the average dealer’s gross profit, while new vehicles represent just 24.1% of gross profits.  

- Domestics continue to increase their share of the buy/sell market at the expense of import non-luxury and import luxury franchises, which both saw their buy/sell market share decline to 22% and 9% respectively in the first half of 2019, the lowest level in five years.   

- Rising real estate prices are increasing the total enterprise value of dealerships and more than offsetting any decline in blue sky value.

- Kerrigan Advisors downgrades Nissan and Infiniti high-end multiples, as the OEM prioritizes volume over dealer profitability and maintains punitive stair step programs that distort vehicle pricing, creating earnings volatility within the dealer network.

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. It includes analysis of all transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in luxury and non-luxury segments. For more details and to preview the report, click here.

The company 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 (www.kerriganadvisors.com/the-kerrigan-index/).

Erin Kerrigan  (www.kerriganadvisors.com/meet-the-team/) is Founder and Managing Director of Kerrigan Advisors, and is a recognized industry expert on dealership valuation, real estate and buy/sells. A sought-after commentator on automotive retailing topics ranging from consumer auto buying trends to auto retail consolidation to private equity in auto retail, she has keynoted numerous automotive conferences and her analysis has appeared in publications such as Automotive News, CNBC.com, The Economist and the Wall Street Journal. For a recent video of Erin’s commentary on the market, click here(www.youtube.com/watch?v=gPrMMtRF-IU&feature=youtu.be).

Ryan Kerrigan (www.kerriganadvisors.com/meet-the-team/) is Managing Director of Kerrigan Advisors and an expert on US auto retail buy/sells and capital-raising transaction work.  Prior, Ryan served as Managing Director at Serent Capital, a $250mm private equity fund investing in middle market companies and served as General Manager of his family’s auto dealership. Mr. Kerrigan began his career as a management consultant at McKinsey & Company, where he advised Fortune 500 companies on growth strategies, organizational issues, pricing and business valuation.

About Kerrigan Advisors

Kerrigan Advisors is the leading 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 auto retail’s largest transactions, including five of the Top 100 Dealership Groups in the US, more than any other firm in the industry. Led by a team of veteran industry experts, the firm does not take listings, rather develops a customized approach for each client to achieve their 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 due diligence.

In addition to the monthly Kerrigan Auto Retail Index™, each quarter, Kerrigan Advisors publishes The Blue Sky Report®, which is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership buy/sell activity and franchise values, received by over 9,000 industry recipients in 35 countries.  Kerrigan Advisors’ Founder & Managing Director, Erin Kerrigan, is a recognized expert on dealership valuation, real estate, and buy/sells, and is a frequent speaker at leading auto retail events and conferences, including NADA, JD Power Automotive Roundtable, Automotive News’ Canadian World Congress, AICPA, and NADC. She has also been quoted numerous times by the Wall Street Journal and interviewed by The Economist and has been a keynote speaker for events hosted by American Honda Motor Company, Audi of America, US Trust, Ohio Automobile Dealer Association, and SunTrust Bank. Kerrigan Advisors’ Managing Director Ryan Kerrigan is also a sought-after industry expert. He is featured in a monthly column for Dealer Magazine and has written Op-Eds for Automotive News.

Kerrigan Advisors Media Contact:
Melanie Webber, 424.603.4340 / melanie(at)mwebbcom.com, mWEBB Communications

Auto Dealership Buy/Sell Market Activity Up 38% in First Quarter 2019, Trending to Sixth Consecutive 200+ Transaction Year

Buy/sell market shows strong 2019 start with 54 completed transactions in Q1 2019, in spite of new vehicle sales slowdown; stability of dealership profitability and increase in sellers to market contributes to robust transaction activity; peaking real estate values and industry debt levels spike market risk, according to The Blue Sky Report® released by Kerrigan Advisors.

Irvine, CA – June 6, 2019 – The 2019 auto dealership buy/sell market rocketed to a strong start in Q1 2019, with 54 completed transactions, representing a 38.5% increase over Q1 2018, indicating that 2019 is on trend to be the sixth consecutive 200+ transaction year, according to the just-released First Quarter 2019 Blue Sky Report® by Kerrigan Advisors.  In spite of a 3.2% new vehicle sales decline, continued profit stability and an increase in sellers coming to market is contributing to the robust outlook for the buy/sell market.

“As Kerrigan Advisors predicted, 2019 is shaping up to be another solid year for buy/sells and valuations,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors.  “In the face of a decline in new vehicle sales, the diversity of the dealership business model continues to demonstrate its value through its ability to sustain profits. In addition, the influx of older generation sellers coming to market, coupled with private capital jumping into the void left by the publics, all add up to a promising buy/sell year.”

The first three months of the year reflect a shift in industry focus towards used vehicles, finance and insurance (“F&I”), and service and parts. Kerrigan noted that this shift to higher margin profit centers  (used vehicle gross margin is three times that of new vehicles and F&I per new vehicle sold has risen 60% since 2010) is a key reason strategic buyers and outside investors remain interested in auto retail acquisitions, with particular interest in high performing dealerships representing strong franchises in growth markets.  And, with aging dealers increasingly concerned over their ability to succeed in a consolidating, evolving auto retail industry, buyers are facing new opportunities, although increasing industry debt poses a looming risk. 

According to the report, the healthy economy and strong financial markets means there continues to be a high rate of complex multi-dealership transactions.  Among the franchises being acquired, domestics continued to grow their buy/sell market share, while import non-luxury franchises saw their market share decline, primarily driven by Hyundai, Kia, Mazda, Nissan and Volkswagen.  Interest in top domestic franchises, such as Chevrolet and Ford, as well and top non-luxury imports, such as Toyota, Honda and Subaru remain high.

“In the face of all these positives in the market, it must be noted that the outlook is less promising for some players, especially weaker, lower performing franchises with low buyer demand who are finding it more difficult to find a buyer, particularly at a strong price,” noted Ryan Kerrigan, Managing Director of Kerrigan Advisors.  “Another factor to watch is that dealership rents appear to have peaked, with Q1 2019 showing a decline for the first time in 10 years. We expect that many dealers are realizing that their businesses can no longer support these high rent levels and, as rents fall, real estate values often follow.”

The report also highlighted that image upgrades required by OEMs are sending sellers to market, but, because these sellers are unwilling to invest the capital required to become facility-compliant, their dealerships will sell at a lower blue sky value in 2019.

In addition, the report identified the following three trends, which are expected to meaningfully impact the buy/sell market through the remainder of 2019.

• Dealership real estate values start to peak 
• Industry debt levels increase buy/sell market risk
• Auto retail’s lack of a dominant public consolidator opens the door to private capital

Highlights from the First Quarter 2019 Blue Sky Report® by Kerrigan Advisors include:

• 54 dealership transactions were completed, representing a 38.5% increase over the first quarter of 2018.
• Significant increase in used to new sales ratio (.96).  Kerrigan Advisors expects the industry to continue to move towards a 1:1 used to new ratio.
• 14 multi-dealership transactions, representing 26% of the buy/sell market in the first quarter.
• Domestics buy/sell market share increased 5.5% in the first quarter to the highest level in five years.
• US public auto retailers’ acquisition spending in the US decreased 68.6% in the first quarter of 2019 compared to the first quarter of 2018, primarily driven by the downward slide in their stock prices.
• Publics sold 18 franchises, for a net decline of 13 franchises.
• Private buyers acquired 95% of the franchises sold in the first quarter of 2019.
• The average dealership saw a 2.2% decline in rent in the first quarter of 2019.
• Dealership real estate remains auto retail’s most valuable asset class, exceeding blue sky on average by 67.1%.
• Kerrigan Advisors’ assessment of blue sky multiples for Q1 2019 remained relatively stable.
• Kerrigan Advisors downgraded Audi’s high-end multiple from 8.25 to 8.0.
• Kerrigan Advisors upgraded Volvo’s high-end multiple, from 3.5 to 4.0

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. It includes analysis of all transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in luxury and non-luxury segments.

For more details and to preview the report, click here.

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. The company 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.

Erin Kerrigan (www.kerriganadvisors.com/meet-the-team/) is Founder and Managing Director of Kerrigan Advisors, and is a recognized industry expert on dealership valuation, real estate and buy/sells. A sought-after commentator on automotive retailing topics ranging from consumer auto buying trends to auto retail consolidation to private equity in auto retail, she has keynoted numerous automotive conferences and her analysis has appeared in publications such as Automotive News, CNBC.com, The Economist and the Wall Street Journal. For a recent video of Erin’s commentary on the market, click here: www.youtube.com/watch?v=gPrMMtRF-IU&feature=youtu.be.

Ryan Kerrigan is Managing Director of Kerrigan Advisors and an expert on US auto retail buy/sells and capital-raising transaction work.  Prior, Ryan served as Managing Director at Serent Capital, a $250mm private equity fund investing in middle market companies and served as General Manager of his family’s auto dealership. Mr. Kerrigan began his career as a management consultant at McKinsey & Company, where he advised Fortune 500 companies on growth strategies, organizational issues, pricing and business valuation.

About Kerrigan Advisors

Kerrigan Advisors is the leading dealership buy/sell advisory firm focused exclusively on providing a high level of client service to dealers nationwide. Led by a team of veteran industry experts, Kerrigan Advisors customizes each sale process to maximize the seller’s transaction proceeds. The firm has sold 79 dealerships in the last five years, including five of the Top 100 Dealership Groups in the US. With the most comprehensive buyer database in the industry, Kerrigan Advisors has the industry context and expertise to match every seller with the right buyer. In addition to Kerrigan Advisors’ buy/sell and capital-raising transaction work, 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 .

In addition to the monthly Kerrigan Auto Retail Index™, each quarter, Kerrigan Advisors publishes The Blue Sky Report®, which is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership buy/sell activity and franchise values, received by over 9,000 industry recipients in 35 countries.  Kerrigan Advisors’ Founder & Managing Director, Erin Kerrigan, is a recognized expert on dealership valuation, real estate, and buy/sells, and is a frequent speaker at leading auto retail events and conferences, including NADA, JD Power Automotive Roundtable, Automotive News’ Canadian World Congress, AICPA, and NADC. She has also been quoted numerous times by the Wall Street Journal and interviewed by The Economist and has been a keynote speaker for events hosted by American Honda Motor Company, Audi of America, US Trust, Ohio Automobile Dealer Association, and SunTrust Bank. Kerrigan Advisors’ Managing Director Ryan Kerrigan is also a sought-after industry expert. He is featured in a monthly column for Dealer Magazine and has written Op-Eds for Automotive News.

Kerrigan Advisors Media Contact:
Melanie Webber, 424.603.4340 / melanie(at)mwebbcom(dot)com, mWEBB Communications

Dealership Buy/Sell Market Marked Fifth Consecutive Year of 200+ Transactions in 2018 with Continued Growth Predicted for 2019

2018 transactions increased 6.9% year over year, including record number of multi-dealership transactions; in spite of auto sales downturn, 2019 acquisition market will be robust, with real estate valuations high and private investors seeing key value in Fixed Ops profit centers and improved retail efficiencies, according to The Blue Sky Report® released by Kerrigan Advisors

Irvine, CA – March 19, 2019 – The automobile dealership buy/sell market recorded another year of tremendous activity in 2018, representing a 6.9% growth over 2017, and the fifth consecutive year of over 200 buy/sells, according to the just-released The Blue Sky Report’s® “Year in Review” by Kerrigan Advisors. Two hundred sixteen transactions closed in 2018, including a record number of multi-dealership transactions.  And, according to the report, this five-year streak shows no signs of abating: in spite of an anticipated slump in auto sales and rising interest rates, Kerrigan Advisors predicts that 2019 will be another robust year for buy/sells and valuations.

“The strength of the dealership buy/sell market over the last five years is a testament to the health of the US economy, the financial markets, and most importantly the auto retail industry.  We believe the number of buyers, particularly those backed by professionally managed capital, will increase in 2019,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors.   “Despite rising interest rates and a decline in new vehicle sales, the average auto dealership remains highly profitable and valuable, continuing to appeal to private dealers who comprised the majority of buyers in 2019."

In addition to a strong economy and the ongoing consolidation and innovation opportunities in auto retail, among the key factors Kerrigan Advisors cites for a strong buy/sell market in 2019 are a rise in the number of private investors seeking to put capital into auto retail (year-to-date, the pace of new investors seeking investments in auto retail has risen 59% as compared to 2018); increased dealership gross profit driven by fixed operations (service & parts), as well as dealerships’ historically demonstrated ability to adjust their business model to create new profit opportunities and reduce variable expenses.

“Buyers are looking for higher quality franchises which are more competitive as new vehicle sales decline,” continued Kerrigan.  “These franchises tend to have more fixed operations revenue, which commands a gross profit margin nearly ten times higher than new vehicles and are benefitting from the surge of vehicles entering the “sweet spot” of customer pay post-warranty, more than making up for margin losses from a contracting vehicle market.”

Kerrigan Advisors noted that while overall Blue Sky multiple averages are lower, due to a decline in lower demand franchises, valuations remain strong, although more stores are trading at average, rather than high multiples. Additionally, valuations are being positively influenced by high real estate valuations which are at peak levels and represented the largest portion of a dealership’s value in 2018:  Kerrigan Advisors estimates the average dealership’s real estate value at $11.3 million, up 4.9% from 2017. This shift in dealership transaction values from blue sky to real estate has reduced the equity requirements of the average transaction which, Kerrigan Advisors believes, is one of the reasons buy/sell activity remains so strong.

Domestics continued to show strength in the 2018 buy/sell market, according to the report, exceeding 50% for the first time in the last five years. On the other hand, import luxury franchises’ market share continued to decline, a trend the report says will continue in 2019 as their high multiples will be more difficult to achieve for some buyers. Also contributing is the sensitivity import luxury franchises have to rising interest rates because their high valuations typically require more leverage.  But, although the larger import segment will also see a decline in 2019, Kerrigan Advisors expects the top import non-luxury franchises, namely Toyota, Honda and Subaru, to grow their buy/sell market share in 2019.

“A key trend for 2019 is that the business model of the franchise will determine buyer demand:  as industry sales contract, buyers become more discerning, focusing on high-performing franchises that have attractive, long term investment characteristics and that tend to outperform the industry when sales decline,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors.   “Meanwhile, weaker franchises with challenging dealer business models will see lower buyer demand because today’s buyers are not attracted to franchises with poor dealer relations, highly variable incentive programs, less supportive captive finance companies, low sales per dealership and weak fixed operations.”

The report also identified the following four market trends, which it predicts will meaningfully impact the buy/sell market in 2019 and beyond.

➢ Sellers avoid image upgrades to capitalize on record real estate values

➢ Rising interest rates impact blue sky values

➢ Franchise business models determine buyer demand

➢ Transaction activity increasingly varies by market

The Blue Sky Report®, published by Kerrigan Advisors, is the auto industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. It includes analysis of all transaction activity for the year, and lays out the high, average and low blue sky multiples for each franchise in luxury and non-luxury segments.

Key Highlights from the 2018 Full Year Blue Sky Report® include:

• 216 transactions closed, versus 202 in 2017, resulting in a 6.9% increase over 2017.
• Year to date, the pace of new investors seeking investments in auto retail has risen 59% as compared to 2018.  
• The number of multi-dealership transactions reached a record 65 for the full year of 2018, a notable 27.5% increase over 2017’s level.
• Domestics’ share of the buy/sell market rose again in 2018, exceeding 50% for the first time in the last five years.
• Public retailers’ acquisition spending declined in 2018 by 6.6% as compared to 2017.
• Private buyers continue to lead industry consolidation, acquiring 93% of the franchises sold in 2018, about the same level as 2017.
• Dealership real estate represented the largest portion of a dealership’s value in 2018, exceeding blue sky value by 84.2%.
• Public companies are undervalued relative to private dealerships.  Public blue sky multiples now average just 5.1x, only slightly above Kerrigan Advisors’ average blue sky multiples for private dealerships, despite the publics’ liquidity premium.

For more details and to preview the report, click here.

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. The company 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.

Erin Kerrigan is Founder and Managing Director of Kerrigan Advisors, and is a recognized industry expert on dealership valuation, real estate and buy/sells. A sought-after commentator on automotive retailing topics ranging from consumer auto buying trends to auto retail consolidation to private equity in auto retail, she has keynoted numerous automotive conferences and her analysis has appeared in publications such as Automotive News, CNBC.com, The Economist and the Wall Street Journal. For a recent video of Erin’s commentary on the market, click here: www.youtube.com/watch?v=gPrMMtRF-IU&feature=youtu.be.

Ryan Kerrigan is Managing Director of Kerrigan Advisors and an expert on US auto retail buy-sell and capital-raising transaction work.  Prior, Ryan served as Managing Director at Serent Capital, a $250mm private equity fund investing in middle market companies and served as General Manager of the family’s auto dealership. Mr. Kerrigan began his career as a management consultant at McKinsey & Company, where he advised Fortune 500 companies on growth strategies, organizational issues, pricing and business valuation.

About Kerrigan Advisors

Kerrigan Advisors is the leading dealership buy/sell advisory firm focused exclusively on providing a high level of client service to dealership sellers nationwide. Led by a team of veteran industry experts, Kerrigan Advisors customizes each sale process to maximize the seller’s transaction proceeds. The firm has sold 79 dealerships in the last five years, including five of the Top 100 Dealership Groups in the U.S. With the most comprehensive buyer database in the industry, Kerrigan Advisors has the industry context and expertise to match every seller with the right buyer. In addition to Kerrigan Advisors’ buy/sell and capital-raising transaction work, the firm also provides a suite of consulting services including accounting preparation for sale, litigation support, open point applications and transactional due diligence.

In addition to the monthly Kerrigan Auto Retail Index™, each quarter, Kerrigan Advisors publishes The Blue Sky Report®, which is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership buy/sell activity and franchise values, received by over 9,000 industry recipients in 35 countries.  Kerrigan Advisors’ Founder & Managing Director, Erin Kerrigan, is a recognized expert on dealership valuation, real estate, and buy/sells, and is a frequent speaker at leading auto retail events and conferences, including NADA, JD Power Automotive Roundtable, Automotive News’ Canadian World Congress, AICPA, and NADC. She has also been quoted numerous times by the Wall Street Journal and interviewed by The Economist and has been a keynote speaker for events hosted by American Honda Motor Company, Audi of America, US Trust, Ohio Automobile Dealer Association, and SunTrust Bank. Kerrigan Advisors’ Managing Director Ryan Kerrigan is also a sought-after industry expert. He is featured in a monthly column for Dealer Magazine and has written Op-Eds for Automotive News.

Kerrigan Advisors Media Contact:
Melanie Webber, 424.603.4340 / melanie@mwebbcom.com, mWEBB Communications

Auto Dealership Buy/Sell Market Picks Up Steam: 2018 On Track for 5th Year of 200+ Acquisitions, According to The Blue Sky Report® released by Kerrigan Advisors

New tax law and economies of scale help publics and consolidators buck trends to grow earnings and fuel Q2 Buy/Sell market to 92% growth over Q1; one-eighth of all auto dealerships have changed hands since 2014 as industry consolidation continues

Irvine, CA – August 29, 2018 – The new tax law and improved economies of scale and scope are among the trends driving a robust Buy/Sell market in Q2, after a slow start to the year, according to The Blue Sky Report’s® Second Quarter Report released by Kerrigan Advisors. 

Seventy-five transactions were completed in Q2, a 92% increase over Q1. With consolidators and publicly-traded auto retailers seeing increased earnings as a result of these factors, profitability at dealerships holding steady, and dealerships embracing innovative, profit-driving business models, Kerrigan Advisors predicts that 2018 will mark the fifth consecutive year to see over 200 transactions.   

 “We estimate one in eight dealerships have changed hands since 2014 and we believe increasing consolidation means this number will only increase,” said Erin Kerrigan, managing director of Kerrigan Advisors.  “Consolidators are leveraging significant opportunities to increase earnings with accretive acquisitions by achieving economies of scale and scope post-transaction.” 

“Consolidators are finding new ways to grow earnings by employing technology and streamlining their business models, changing their selling systems and introducing new products across their platforms, while the ‘to-be-consolidated’ are squeezing more profit out of their existing business models. And both are being positively impacted by reduced taxes as a result of tax reform,” added Ryan Kerrigan, managing director of Kerrigan Advisors.

The Kerrigans, however, did note that while blue sky values remained high in Q2, they were below 2017 levels, partly as a result of rising interest rates and floor plan cost increases.  But, despite a plateauing SAAR, The Kerrigan Index™, which tracks publicly-traded auto retail companies, continues to rise – indicating that Wall Street believes that scale matters and that anticipated disruptions to auto retail will disproportionately benefit the largest dealership groups.  “There is little doubt that size will be a key driver for future success in auto retail,” added Ryan Kerrigan.

The Blue Sky Report, published by Kerrigan Advisors, is the auto industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. It includes analysis of all transaction activity for the quarter, and lays out the high, average and low blue sky multiples for each franchise in luxury and non-luxury segments. 

Key Highlights from the Blue Sky Report Q2 Report include:

• 114 dealership buy/sell transactions were completed in the first half of 2018, compares to 101 transactions in the first half of 2017.
• The number of franchises sold rose 22% over the first half of 2017.
• The number of multi-dealership transactions increased to 33 during the first half of 2018, versus 23 in the first half of 2017. 
• Domestics maintained their leading position, followed by import non-luxury franchises and import luxury franchises.
• The publics are tracking towards nearly $1 billion of US acquisition spending in 2018, a level that would surpass all prior years, except 2014 when Lithia Motors acquired DCH Auto Group.
• Private dealership groups continue to represent the largest share of dealership acquirers.  Only 22 of the estimated 192 franchises that changed hands in the first half of the year, were acquired by public companies. 
• Dealership rents rose as compared to 2017, creating concern: the average dealer now has a rent to gross profit of 11.2%, a 3.7% rise over the 2017 ratio.

The Q2 Report outlines three key trends that Kerrigan Advisors anticipate will have a significant impact on the buy/sell market for the remainder of 2018 and into 2019:

• Consolidators focus on geographic concentration
• Successful business models command higher blue sky values
• Expense reduction becomes a major consolidation driver
• In addition to expense reduction and a focus on geographic concentration, the report emphasizes the importance of successful and innovative business models to increased valuations, citing the recent sale of Wilsonville Toyota and Wilsonville Subaru, both of which effectively utilized a no-negotiation sales model, resulting in profitability far higher than industry standards.

“Buyers of dealerships today are students of auto retail.  Most spend their days and nights thinking of ways to enhance their business’ profitability and strategically drive earnings growth,” said Erin Kerrigan.  “Acquisition opportunities that provide an expanding group with new strategies to grow earnings will command a premium in today’s buy/sell market.”

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 the report, click here: www.kerriganadvisors.com/the-blue-sky-report/. The company 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: http://www.kerriganadvisors.com/the-kerrigan-index/.

Erin Kerrigan is Founder and Managing Director of Kerrigan Advisors, and is a recognized industry expert on dealership valuation, real estate and buy/sells. A sought-after commentator on automotive retailing topics ranging from consumer auto buying trends to auto retail consolidation to private equity in auto retail, she has keynoted numerous automotive conferences and her analysis has appeared in publications such as Automotive News, CNBC.com, and the Wall Street Journal. For a recent video of Erin’s commentary on the market, click here: https://www.youtube.com/watch?v=gPrMMtRF-IU&feature=youtu.be.

Ryan Kerrigan is Managing Director of Kerrigan Advisors and an expert on US auto retail buy-sell transaction work.  Prior, Ryan served as Managing Director at Serent Capital, a $250mm private equity fund investing in middle market companies and served as General Manager of the family’s auto dealership. Mr. Kerrigan began his career as a management consultant at McKinsey & Company, where he advised Fortune 500 companies on growth strategies, organizational issues, pricing and business valuation.

About Kerrigan Advisors

Kerrigan Advisors is the leading dealership buy/sell advisory firm focused on providing a high level of client service for dealership sellers nationwide. Led by a team of veteran advisors, Kerrigan Advisors customizes each sale process to maximize the seller’s transaction proceeds. The firm has sold 72 dealerships since 2015, including five of the Top 100 Dealership Groups in the U.S. With the most comprehensive buyer database in the industry, Kerrigan Advisors has the industry context and expertise to match every seller with the right buyer. In addition to Kerrigan Advisors’ sell-side transaction work, the firm also provides a suite of consulting services including accounting preparation for sale, litigation support, open point applications and transactional due diligence.

In addition to the monthly Kerrigan Auto Retail Index, each quarter, Kerrigan Advisors publishes The Blue Sky Report®, a Kerrigan Quarterly, which is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership buy/sell activity and franchise values.  Kerrigan Advisors’ Managing Director, Erin Kerrigan, is a recognized industry expert on dealership valuation, real estate, and buy/sells, and is a frequent speaker at leading auto retail events and conferences, including NADA, JD Power Automotive Roundtable, AICPA, NADC, and Driving Sales’ President’s Club. She has also been a keynote speaker for events hosted by American Honda Motor Company, Audi of America, US Trust, Ohio Automobile Dealer Association, and SunTrust Bank and has led webinars for NADA and Automotive News.  Kerrigan Advisors’ Managing Director Ryan Kerrigan is also a sought-after industry expert. He is featured in a monthly column for Dealer Magazine and has written Op-Eds for Automotive News, among other outlets.

Kerrigan Advisors Media Contact:
Melanie Webber, 424.603.4340 / melanie@mwebbcom.com, mWEBB Communications

Longest running dealership group in Illinois completes sale of 15 franchise dealerships, marking fifth Top 100 Dealership Group transaction completed by Kerrigan Advisors.

AutoCanada enters US market with acquisition, which is largest acquisition of US dealerships by an international buyer in the history of auto retail.    

Irvine, CA, March 21st, 2018 – Kerrigan Advisors, the leading sell-side advisory firm to auto dealers in the US, represented and advised Gary and Caroline Grossinger, owners of the Grossinger Auto Group, in their sale to AutoCanada.  This transaction represents AutoCanada’s first acquisition in the US.  The sale of Grossinger Auto Group marks the fifth Top 100 Dealership Group Kerrigan Advisors has represented, more than any other advisory firm. 

With 15 franchises, Grossinger Auto Group is the longest running dealer group in Illinois and was recently listed as the 95th largest dealership group in the United States.  AutoCanada is the largest dealership group in Canada with over $3 billion in 2017 revenue, and is the only public dealership group in Canada.  This transaction represents the largest acquisition of US dealerships by an international buyer in the history of auto retail.

“Gary and I have had a tremendous experience working both with the Kerrigan Advisors and AutoCanada team throughout this transaction.  It was a very heartfelt and bittersweet decision for Gary and me to ultimately decide to sell our dealerships in Illinois after so many years and such a long standing, very strong and treasured family legacy. Always having immense passion for our business and a deep appreciation for our outstanding personnel, once we decided to sell we needed to ensure we chose an advisor group and, ultimately, a purchaser who was aligned with our priorities of providing employees security, continuity of our community relationships, and our focus on the customer experience,” said co-President Caroline Grossinger. “With Kerrigan Advisors’ guidance and expertise, we were able to find such a group with AutoCanada.  We are looking forward to the platform of the 15 franchises operating under the very successful AutoCanada team with much success and prosperity.”

Caroline and Gary Grossinger are grandchildren of founder Sam Grossinger, and took over operations of the group at the passing of their father Irwin. A community institution, Grossinger began as a parking garage, then moved into tires, and eventually became a Pontiac franchise in 1928, growing to become one of the largest auto groups in the country

The sale includes nine dealerships representing 15 franchises throughout greater Chicago, including Lincolnwood, Palatine, and Normal. The automotive brands include Audi, Cadillac, Chevrolet, Hyundai, KIA, Lincoln, Mercedes-Benz, Subaru, Toyota, Volkswagen, and Volvo.

“We needed sell-side advisors who could manage the complexities of a large, legacy dealership group like ours,” said co-President Gary Grossinger. “We chose Kerrigan Advisors because they have more experience than any other firm representing the largest dealership groups in our industry and we valued their insight and tremendous buy/sell experience.”

Headed by Erin and Ryan Kerrigan, Kerrigan Advisors has now represented on the sale of 69 dealerships since July 2015, making it the most active sell-side advisor in the auto retail industry. 

“This was a critically complex transaction that included an international buyer, AutoCanada, the largest auto retailer in Canada, in their first US acquisition,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors, who led the transaction. “It was a unique opportunity for Kerrigan Advisors to link an international strategic player with an important U.S. dealer group. It’s also significant to see an international, public group entering the U.S. market with a platform acquisition.  That’s a trend we’ve spotted in prior Blue Sky Reports and one we expect to continue in the coming years.”

“Kerrigan Advisors is thrilled to have facilitated the largest US auto retail transaction to an international buyer in the history of auto retail.  Never has a non-US buyer acquired 15 franchises in a single transaction,” said Erin Kerrigan, Managing Director of Kerrigan Advisors. “With the Blue Sky Report now distributed to over 7,000 individuals in 35 countries, Kerrigan Advisors continues to field inbound calls from non-US buyers interested in investing in US dealerships.  We expect many of our future transactions will be cross-border.”

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 the report, click here. The company 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.

Erin Kerrigan is Founder and Managing Director of Kerrigan Advisors, and is a recognized industry expert on dealership valuation, real estate and buy/sells. A sought-after commentator on automotive retailing topics ranging from consumer auto buying trends to auto retail consolidation to private equity in auto retail, she has keynoted numerous automotive conferences and her analysis has appeared in publications such as Automotive News, CNBC.com, and the Wall Street Journal. For a recent video of Erin’s commentary on the market, click here.

Ryan Kerrigan is Managing Director of Kerrigan Advisors and an expert on US auto retail buy-sell transaction work. Prior, Ryan served as Managing Director at Serent Capital, a $250MM private equity fund investing in middle market companies and served as General Manager of the family’s auto dealership. Mr. Kerrigan began his career as a management consultant at McKinsey & Company, where he advised Fortune 500 companies on growth strategies, organizational issues, pricing and business valuation. For a recent video of Ryan’s commentary on the market, click here.

About Kerrigan Advisors

Kerrigan Advisors is the leading dealership buy/sell advisory firm focused on providing a high level of client service for dealership sellers nationwide. Led by a team of veteran advisors, Kerrigan Advisors customizes each sale process to maximize the seller’s transaction proceeds. The firm has sold 69 dealerships since 2015.  With the most comprehensive buyer database in the industry, Kerrigan Advisors has the industry context and expertise to match every seller with the right buyer. In addition to Kerrigan Advisors’ sell-side transaction work, the firm also provides a suite of consulting services including accounting preparation for sale, litigation support, open point applications and transactional due diligence.

In addition to the monthly Kerrigan Auto Retail Index, each quarter, Kerrigan Advisors publishes The Blue Sky Report®, a Kerrigan Quarterly, which is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership buy/sell activity and franchise values.  Kerrigan Advisors’ Managing Director, Erin Kerrigan, is a recognized industry expert on dealership valuation, real estate, and buy/sells, and is a frequent speaker at leading auto retail events and conferences, including NADA, JD Power Automotive Roundtable, AICPA, NADC, and Driving Sales’ President’s Club. She has also been a keynote speaker for events hosted by American Honda Motor Company, Audi of America, US Trust, Ohio Automobile Dealer Association, and SunTrust Bank and has led webinars for NADA and Automotive News.  Kerrigan Advisors’ Managing Director Ryan Kerrigan is also a sought-after industry expert. He is featured in a monthly column for Dealer Magazine and has written Op-Eds for Automotive News, among other outlets.

Contacts

Kerrigan Advisors Media Contact:
mWEBB Communications
Melanie Webber, 949.307.1723
melanie@mwebbcom.com

Auto Dealership Transactions Stay Above 200, as Consolidation Continues and Sellers Fast-Track Succession Plans, according to The Blue Sky Report® released by Kerrigan Advisors

For the fourth consecutive year, buy/sell transactions exceeded 200; since 2014 the industry has completed over 850 buy/sell transactions – one of the most active markets in auto retail history.

Irvine, CA –March 19, 2018 – The auto dealership Buy/Sell market surpassed 200 transactions for the fourth consecutive year in 2017, according to The Blue Sky Report’s® Full Year Report released by Kerrigan Advisors.

Factors driving market activity, says The Blue Sky Report, include dealership consolidation, profitability, and the growing number of sellers coming to market. Many dealers reassessed succession plans in light of disruptive projections about the changing nature of auto retail, and the belief that only large groups will be able to successfully navigate the industry’s evolution. Sellers also cited concern over reliance on OEM incentives to support dealership profitability, as well as manufacturer facility requirements.   

“The economic benefits of consolidation continued to bring new buyers to market in 2017, and these new entrants included a growing number of international auto retailers,” said Erin Kerrigan, managing director of Kerrigan Advisors. “These international buyers are primarily motivated by the tremendous consolidation opportunity in the US auto retail market, considered by many to be the most fragmented in the developed world. High net worth individuals and family offices also sought investments in auto retail in 2017. All of these new entrants are highly attracted to the economies of scale available in US auto retail through meaningful consolidation.”

The Blue Sky Report, published by Kerrigan Advisors, is the auto industry's most comprehensive and authoritative quarterly report on dealership M&A activity, as well as franchise values. It includes analysis of all transaction activity in 2017 and lays out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments for the quarter.  

Blue Sky Report data and analysis from the 2017 Full Year Report includes:

• 202 dealership buy/sell transactions were completed in 2017, according to Kerrigan Advisors’ research and The Banks Report, compared to 221 transactions in 2016.  After hitting a plateau in 2015 at 240 transactions, buy/sell activity declined slightly; Kerrigan Advisors expects an increase of activity in 2018 compared to 2017.
• Multi-dealership transactions declined slightly in 2017. Fifty-one multi-dealership transactions closed in 2017, resulting in a 11% decrease over 2016’s record year. The size of some dealership groups is a motivating factor in the sale. Many are simply too large and too valuable to pass on to the next generation, particularly given predicted industry disruption.
• For 2017, domestics’ share of the buy/sell market remained steady at 43%; import luxury represented 20% of the buy/sell market in 2017, a disproportionate number considering that import luxury franchises represent just 9% of US franchises.
• Public retailers’ acquisition spending increased 20% in 2017 compared to 2016, led by Lithia Motors.
• Private buyers, including new entrants to US auto retail, dominated the 2017 US dealership buy/sell market. Of the 343 franchises sold, 317 were acquired by private buyers.

Over 60 dealership groups now report over $1 billion in sales. That number is expected to grow considerably in the next five years, as the largest groups consolidate the industry.

The report identifies three key trends shaping 2018’s buy/sell market:

• Tax reform benefits auto retail and results in increased buy/sell activity
• Dealers’ investment strategies shaped by auto retail’s expected evolution
• Dealership profit variability widens blue sky pricing ranges

“We expect 2018 to be a very active year for buy/sells with more private and public buyers eager to put their capital to work. These buyers believe growth is the answer to a changing auto retail environment and are eager to capitalize on economies of scale and scope,” added Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We also expect more sellers coming to market in 2018, particularly given the drumbeat of change reverberating throughout the industry.”

Kerrigan Advisors is deeply involved in the Buy/Sell Market having advised on the sale of 60 dealerships, including four of the Top 100 Dealership Groups (Sam Swope Auto Group, the Carbone Auto Group, the Tonkin Family of Dealerships, and Downtown LA Auto Group) since 2015. Kerrigan Advisors’ extensive experience representing the largest dealership groups in the country provides the firm with a unique perspective on the trends shaping the industry and today’s franchise values. 

The Blue Sky Report®, a Kerrigan Quarterly, is published four times a year and includes Kerrigan Advisors’ signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments.   To download The Blue Sky Report, click here: www.kerriganadvisors.com/the-blue-sky-report/.

Kerrigan Advisors also releases a monthly index, The Kerrigan Index™, composed of the seven publicly traded auto retail companies with operations focused on the US market.  The Kerrigan 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: www.kerriganadvisors.com/the-kerrigan-index/.

Erin Kerrigan (http://www.kerriganadvisors.com/meet-the-team/) is Founder and Managing Director of Kerrigan Advisors, and is a recognized industry expert on dealership valuation, real estate and buy/sells. A sought-after commentator on automotive retailing topics ranging from consumer auto buying trends to auto retail consolidation to private equity in auto retail, she has keynoted numerous automotive conferences and her analysis has appeared in publications such as Automotive News, CNBC.com, and the Wall Street Journal. For a recent video of Erin’s commentary on the market, click here: https://www.youtube.com/watch?v=gPrMMtRF-IU&feature=youtu.be.

Ryan Kerrigan (http://www.kerriganadvisors.com/meet-the-team/) is Managing Director of Kerrigan Advisors and an expert on US auto retail buy-sell transaction work. Prior, Ryan served as Managing Director at Serent Capital, a $250MM private equity fund investing in middle market companies and served as General Manager of the family’s auto dealership. Mr. Kerrigan began his career as a management consultant at McKinsey & Company, where he advised Fortune 500 companies on growth strategies, organizational issues, pricing and business valuation. For a recent video of Ryan’s commentary on the market, click here: https://cbtnews.com/october-buysell-report-kerrigan-advisors-market-update/.

About Kerrigan Advisors

Kerrigan Advisors is the leading dealership buy/sell advisory firm focused on providing a high level of client service for dealership sellers nationwide. Led by a team of veteran advisors, Kerrigan Advisors customizes each sale process to maximize the seller’s transaction proceeds. The firm has sold 60 dealerships since 2015.  With the most comprehensive buyer database in the industry, Kerrigan Advisors has the industry context and expertise to match every seller with the right buyer. In addition to Kerrigan Advisors’ sell-side transaction work, the firm also provides a suite of consulting services including accounting preparation for sale, litigation support, open point applications and transactional due diligence.

In addition to the monthly Kerrigan Auto Retail Index, each quarter, Kerrigan Advisors publishes The Blue Sky Report®, a Kerrigan Quarterly, which is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership buy/sell activity and franchise values.  Kerrigan Advisors’ Managing Director, Erin Kerrigan, is a recognized industry expert on dealership valuation, real estate, and buy/sells, and is a frequent speaker at leading auto retail events and conferences, including NADA, JD Power Automotive Roundtable, AICPA, NADC, and Driving Sales’ President’s Club. She has also been a keynote speaker for events hosted by American Honda Motor Company, Audi of America, US Trust, Ohio Automobile Dealer Association, and SunTrust Bank and has led webinars for NADA and Automotive News.  Kerrigan Advisors’ Managing Director Ryan Kerrigan is also a sought-after industry expert. He is featured in a monthly column for Dealer Magazine and has written Op-Eds for Automotive News, among other outlets.

Kerrigan Advisors Media Contact:
mWEBB Communications
Melanie Webber, 424.603.4340 / melanie@mwebbcom.com

Dealership Transaction Values at Record Levels as Sellers Continue to Flock to Market, according to The Blue Sky Report® released by Kerrigan Advisors

Buy/Sell market remains highly active as concerns about disruptive technology drive dealers to sell; over 200 transactions projected to close in 2017 

Irvine, CA –November 28, 2017 – The auto dealership Buy/Sell market is poised for its most active year ever, with over 200 transaction closings projected for 2017, according to The Blue Sky Report® for Q3 2017 released by Kerrigan Advisors.

Factors driving market activity, says The Blue Sky Report, include strong financial markets, well-funded investors, and rising real estate values.  The pressures of a more challenging auto retail market, dropping margins and rising concerns about the impact of disruptive automotive technology on the traditional dealership business model are also having a major impact.  And, while blue sky values are slightly lower than their 2015 peak, and the overall industry is showing some stagnation, 2017 remains on track to be the third most profitable ever, driving more sellers to market and transaction values to record levels when including dealership real estate.

“Historic mega deals with complex ownership structures and multiple franchises are on the rise. These transactions are supported by a financial market that is willing and able to invest hundreds of millions of dollars in auto retail, despite some of the doomsday headlines about slowing sales,” says Erin Kerrigan, Managing Director of Kerrigan Advisors. “Investors and financial institutions see an opportunity to participate in a decades-long auto retail consolidation game – one that they expect will produce winners and losers, particularly as technological innovations potentially change the dealership business model as we know it.”

The Blue Sky Report, published by Kerrigan Advisors, is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership M&A activity, as well as franchise values. It includes analysis of Q3 2017 - laying out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments for the quarter - and offers a detailed view of public and private company dealership acquisition activity.  

Key data and analysis from the Q3 2017 Blue Sky Report includes:

• The Kerrigan Index is up 4.24% year to date and 608% from its 2009 recession lows.
• 149 dealership buy/sell transactions were completed in the first nine months of 2017, according to Kerrigan Advisors’ research and The Banks Report, compared to 172 transactions in the first nine months of 2016. After hitting a plateau in 2015, buy/sell activity declined slightly in the first nine months of 2017, but is still tracking to be one of the most active years on record.
• Multi-dealership transactions represented one quarter of the completed sales in the first nine months of 2017. Kerrigan Advisors expects at least 51 multi-dealership transactions will close this year.
• Year to date, domestics’ share of the buy/sell market increased to 49%, up 18% from 2015.
• Non-luxury and luxury import franchises’ buy/sell market share declined.
• Public retailers’ US acquisition spending increased 61% in the first nine months of 2017 compared to the first nine months of 2016.
• Private dealership groups represent the largest share of dealership acquirers. Of the estimated 236 franchises which changed hands in the first nine months of the year, only 23 were acquired by public companies.
• Real estate, for most dealers, is their most valuable asset, far exceeding franchise value. Kerrigan Advisors estimates dealership real estate prices rose 3% in the first nine months of the year.

The report identifies three key trends shaping 2018’s buy/sell market and the remainder of 2017.

• The evolution of the dealership business model drives more sellers to market
• Dealers are choosing to sell their real estate with their franchise
• Captive finance companies play a critical role in acquisition financing

“Our clients increasingly cite the risk factors associated with changes in auto retail as their single biggest reason for selling, with many believing auto retail will consolidate out of necessity, as only the largest, best-capitalized players will have the balance sheet to navigate auto retail’s evolution,” continued Kerrigan. “This is contributing to a very competitive buy/sell market, particularly for top franchises and attractive platforms and the growing population of well-funded buyers in the market. This creates a healthy market equilibrium – one where buyers and sellers agree on price and complete win/win transactions. Kerrigan Advisors believes this equilibrium will continue for the next several years and result in a highly active buy/sell market.”

Kerrigan Advisors is deeply involved in the Buy/Sell Market having advised on the sale of 60 dealerships, including four of the Top 100 Dealership Groups in the US. Most recently, Kerrigan advised on the sale of Puente Hills Chevrolet, in their recent sale to Pendragon PLC (www.kerriganadvisors.com/kerrigan-advisors-represents-puente-hills-chevrolet-sale-pendragon-plc/) Kerrigan Advisors’ extensive experience representing the largest dealership groups in the country provides the firm with a unique perspective on the trends shaping the industry and today’s franchise values. 

The Blue Sky Report®, a Kerrigan Quarterly, is published four times a year and includes Kerrigan Advisors’ signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments.   To download The Blue Sky Report, click here: www.kerriganadvisors.com/the-blue-sky-report/.  

Kerrigan Advisors also releases a monthly index, The Kerrigan Index™, composed of the seven publicly traded auto retail companies with operations focused on the US market.  The Kerrigan 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: www.kerriganadvisors.com/the-kerrigan-index/.

Erin Kerrigan (www.kerriganadvisors.com/meet-the-team/) is Founder and Managing Director of Kerrigan Advisors, and is a recognized industry expert on dealership valuation, real estate and buy/sells. A sought-after commentator on automotive retailing topics ranging from consumer auto buying trends to auto retail consolidation to private equity in auto retail, she has keynoted numerous automotive conferences and her analysis has appeared in publications such as Automotive News, CNBC.com, and the Wall Street Journal. For a recent video of Erin’s commentary on the market, click here: https://youtu.be/gPrMMtRF-IU.

Ryan Kerrigan (www.kerriganadvisors.com/meet-the-team/) is Managing Director of Kerrigan Advisors and an expert on US auto retail buy-sell transaction work. Prior, Ryan served as Managing Director at Serent Capital, a $250MM private equity fund investing in middle market companies and served as General Manager of the family’s auto dealership. Mr. Kerrigan began his career as a management consultant at McKinsey & Company, where he advised Fortune 500 companies on growth strategies, organizational issues, pricing and business valuation. For a recent video of Ryan’s commentary on the market, click here: cbtnews.com/october-buysell-report-kerrigan-advisors-market-update/.

About Kerrigan Advisors

Kerrigan Advisors is the leading dealership buy/sell advisory firm focused on providing a high level of client service for dealership sellers nationwide. Led by a team of veteran advisors, Kerrigan Advisors customizes each sale process to maximize the seller’s transaction proceeds. The firm has sold 60 dealerships since 2015.  With the most comprehensive buyer database in the industry, Kerrigan Advisors has the industry context and expertise to match every seller with the right buyer. In addition to Kerrigan Advisors’ sell-side transaction work, the firm also provides a suite of consulting services including accounting preparation for sale, litigation support, open point applications and transactional due diligence.

In addition to the monthly Kerrigan Auto Retail Index, each quarter, Kerrigan Advisors publishes The Blue Sky Report®, a Kerrigan Quarterly, which is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership buy/sell activity and franchise values.  Kerrigan Advisors’ Managing Director, Erin Kerrigan, is a recognized industry expert on dealership valuation, real estate, and buy/sells, and is a frequent speaker at leading auto retail events and conferences, including NADA, JD Power Automotive Roundtable, AICPA, NADC, and Driving Sales’ President’s Club. She has also been a keynote speaker for events hosted by American Honda Motor Company, Audi of America, US Trust, Ohio Automobile Dealer Association, and SunTrust Bank and has led webinars for NADA and Automotive News.  Kerrigan Advisors’ Managing Director Ryan Kerrigan is also a sought-after industry expert. He is featured in a monthly column for Dealer Magazine and has written Op-Eds for Automotive News, among other outlets.

Contacts

Kerrigan Advisors Media Contact:
mWEBB Communications
Melanie Webber, 424.603.4340
melanie@mwebbcom.com