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

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

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

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

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

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

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

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

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

2023 Buy/Sell Trends

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

·       Buyers become increasingly selective with their acquisition criteria

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

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

·       OEMs more aggressively manage their dealership networks

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Kerrigan Advisors also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here.

About Kerrigan Advisors 

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

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

Kerrigan Advisors Media Contact:

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

Sale of Southwest Florida’s top volume Chevrolet dealership marks the 14th Kerrigan-led franchise sale in Florida since 2019, making the firm the most active in the state

April 3, 2023 – Incline Village, NV – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented the Winton and Denson families in the sale of Estero Bay Chevrolet to Group 1 Automotive (NYSE: GPI). Estero Bay Chevrolet is the top volume Chevrolet dealership in Southwest Florida, Florida’s second fastest growing region by population growth. With the completion of this transaction, Kerrigan Advisors has successfully advised on the sale of 14 Florida franchises since 2019, making the firm the most active auto dealership sell-side advisor in the state.  

In 2007, Charles Winton and his partner, Pat Denson, were selected by General Motors to open Estero Bay Chevrolet in Southwest Florida, one of the most attractive markets in the US. As a result of their leadership, Estero Bay Chevrolet became one of the highest volume dealerships in the area, winning numerous awards from GM and the industry. In addition to being the dominant Chevrolet dealership in Southwest Florida, Estero Bay Chevrolet ranks sixth in the state and 44th in the nation (top 1.5%) by Chevrolet new unit sales. The dealership has won the highly coveted Chevrolet Dealer of the Year award every year since 2018, an honor bestowed on a select number of Chevrolet dealers nationwide. In addition, Estero Bay Chevrolet is also a Carfax top-rated dealer, recently won Consumer Satisfaction Awards from DealerRater, and boasts one of the highest customer ratings with Kelley Blue Book, Cars.com and Dealer Surveys.

“Representing Charles Winton and Pat Denson in this transaction was a true honor for me and my team. Estero Bay is not only an incredibly valuable dealership, it also represents Charles and Pat’s commitment to excellence and investment in their community. Estero’s success is a product of their honorable character and exceptional leadership of their employees and service to their customers,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Demand for proven, successful dealerships remains strong nationwide, and Estero Bay Chevrolet is a paragon of success in a premier auto sales region: Florida is the top auto retail market, and one of the most attractive states to do business. Charles and Pat built an incredible legacy of success and community service at Estero Bay Chevrolet, and it was a privilege to advise them on this transaction.”

Estero Bay Chevrolet’s focus on customer service includes a commitment to the communities surrounding the dealership, including Naples, Bonita Springs and Fort Myers. Over the years, the dealership has been a proud donor and supporter of the community, offering scholarships to students in need of financial assistance at Florida Gulf Coast University. Winton, a Foundation Fellow and Chair Emeritus of Florida Gulf Coast University Foundation, helps nurture the growth and education of students through The Charles and Melanie Winton Foundation, while Pat and his wife, Brooke Denson, serve as trustees of SWFL Children’s Charities and leaders of the charity’s annual fundraising event, Southwest Florida Wine and Food Fest, which raises funds to improve pediatric health services in the region.

“At an early age, my wife and I were taught the obligation of giving back,” said Charles Winton, President of Estero Bay Chevrolet. “One of the ways we do that is with our support of Florida Gulf Coast University. We believe that education equals hope and opportunity; our success at Estero Bay Chevrolet has helped to build those opportunities for others,” he said. Pat Denson, Managing Partner of Estero Bay Chevrolet said, “Ever since the first shovel hit dirt on the day we began construction, our focus has been to build and operate a first-class, community-focused operation, including our scholarships to Florida Gulf Coast University, and our commitment to SWFL Children’s Charities.”

Winton began his career as an accountant, spending more than a decade working with dealership financials as a CPA, and learning the retail business from “the top down and bottom up,” ultimately being accepted into the General Motors Minority Dealer Development program. The Charles and Melanie Winton Foundation continues to be active in the greater Fort Myers area along with the greater Charlotte, North Carolina market, where Winton will continue to own and operate South Charlotte Chevrolet and Rock Hill Buick GMC dealerships.

 “We were very happy to be represented by Kerrigan Advisors, a firm that clearly shared – and respected – Pat and I’s commitment to performance and professionalism,” said Winton. “Their deep knowledge of the dealership buy/sell market nationwide, their team’s attention to detail, as well as their expertise in shepherding the sales of many high volume, valuable dealerships like Estero Bay Chevrolet, was key to the success of this transaction. We cannot recommend Kerrigan Advisors enough to dealers who are considering a sale and seek a partner to manage that process from beginning to success.”

Florida dealerships are among the highest volume and most profitable in the nation. Average revenue per dealership in Florida is the highest in the US, as the state’s population and economic growth rates have been some of the highest in the nation. Florida is the fifth fastest growing state by population growth and is the fourth best state in the Tax Foundation’s State Business Tax Climate Index for 2022. The state’s robust population growth, opportune tax climate and higher disposable incomes have led Florida dealerships to be some of the highest volume and most profitable in the nation. Southwest Florida is at the leading edge of this growth: The Cape Coral MSA, which makes up 55% of the Southwest Florida region, is the country’s 12th fastest growing MSA; its population is expected to rise 34% and reach more than 1.05M people by 2045.

“The Estero Bay Chevrolet transaction follows a volume trend we began to track in our Third Quarter 2022 Blue Sky Report®,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Thanks to economies of scale, high volume dealership benefits from sustainable earnings margins. This means that dealerships like Estero Bay Chevrolet — with a well-run operation and a successful high volume strategy — sell at a price premium. This trend is especially relevant in a business-friendly state like Florida.”

Stephen Dietrich of Holland & Knight served as legal counsel to the seller. Buddy Dearman and Thomas England of FORVIS served as the seller’s accountants. Brian Nolen of Nolen PLLC served as legal counsel to the buyer.

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

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2022 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented 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

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

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

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

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

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

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

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

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

Third Quarter 2022 Buy/Sell Trends

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Kerrigan Advisors also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here.

About Kerrigan Advisors 

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

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

Kerrigan Advisors Media Contact:

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

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

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

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

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

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

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

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

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

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

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2022 Kerrigan Dealer Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

About Kerrigan Advisors

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

Kerrigan Advisors Media Contact:

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

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

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

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

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

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

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

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

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

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

About Kerrigan Advisors

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

Kerrigan Advisors Media Contact:

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

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

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

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

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

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

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

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

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

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

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

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

Additional Franchise Valuation Highlights from the 2022 Kerrigan Dealer Survey:

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

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

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

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

Methodology

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

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

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

·       To access The Kerrigan Index™, click here.

About Kerrigan Advisors

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

Kerrigan Advisors Media Contact:

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

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

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

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

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

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

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

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

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

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

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

About Kerrigan Advisors 

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

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

Kerrigan Advisors Media Contact:

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

Transaction marks the 166th transaction led by Kerrigan Advisors since 2015, and their 6th multi-dealership sale in 2022

Incline Village, NV – October 20, 2022– – Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Baxter Automotive Group in its sale of four Chrysler Dodge Jeep Ram dealerships (CDJR): Baxter of Omaha, Baxter of Papillion, Baxter of Bellevue, Baxter of Lincoln. The dealerships were sold to a partnership of Edwards Auto Group, Sid Dillon Auto Group and H&H Automotive.

“Our firm was honored to represent Baxter Auto Group in this transaction,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “We have had the opportunity to work with the Baxter team over the last several years, helping them determine how to best grow and broaden their business. This transaction will allow them to diversify geographically and to focus on core brands.”

“Kerrigan Advisors has been with us every step of the way on this transaction,” said Mickey Anderson, President of Baxter Automotive Group. “Their partnership not only gave our team confidence that this transaction was aligned with our objectives and values, but also to move forward with key strategic decisions.”

Founded over 60 years ago, Baxter Automotive Group is the 44th largest US dealership group with more than 20 locations across Nebraska, Kansas and Colorado. Baxter’s dedication to the communities they serve is legendary and a core principle of their founder, Tal Anderson – one that continues to this day across hundreds of partnerships and charitable causes, including Boys & Girls Club of the Midlands and the University of Nebraska.

“There remains very healthy buyer demand for high volume domestic dealerships in domestic dominant markets like Nebraska” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “The CDJR brand captures impressive market share in the Lincoln and Omaha markets. Buyers are quick to step up for franchises that fit a market well, as Baxter’s franchises did here.”

The transaction features four high volume dealerships that represent over 55% of CDJR sales in the Omaha market, driven by the success of premium brands Jeep and Ram. “These are successful dealerships representing strong brands in the growing Omaha and Lincoln market. This significant transaction, the highest value in the Omaha market to our knowledge, is evidence that valuations remain high for successful dealerships that are well suited to a market, a trend discussed in our firm’s quarterly Blue Sky Report,” said Ryan Kerrigan.

The transactions are the 163rd, 164th, 165th, and 166th dealerships sold by Kerrigan Advisors since 2015, and their 20th dealership sold this year. To date, Kerrigan Advisors has led six multi-dealership transactions in 2022.

“When we originally reached out to Kerrigan Advisors, we did so because we knew that they brought unique strategic insight to growing groups such as ours. Our conversations ultimately led to the decision to sell the Stellantis platform, and their expert advice has been critical during the sale process,” continued Anderson. “They represented our best interests, provided invaluable strategic market insight, and handled the transaction superbly. We cannot recommend them enough to other dealers considering a sale or divestiture.”

Don Erftmier, Jr. of Erftmier Law, LLC served as legal counsel to the seller.

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

About Kerrigan Advisors 

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers in the US. The firm advises auto dealers nationwide, enhancing value through the lifecycle of growing, operating and monetizing their businesses, 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

Fields Auto Group acquires coveted luxury dealerships; sale marks the 161st and 162nd Kerrigan-led dealership sale since 2015, and fifth multi-dealership transaction in 2022

Incline Village, NV – October 19, 2022 – Kerrigan Advisors, the premier sell-side advisory firm to auto dealers in the US, represented and advised Sun Motor Cars of Chicago, owned by Daniel Sunderland and David Nocera on the sale of Mercedes-Benz & Sprinter of Orland Park and the scheduled sale of Mercedes-Benz of Bourbonnais to Illinois and Florida-based Fields Auto Group, one of the largest private dealership groups in the nation. This transaction marks Kerrigan Advisors’ 161st and 162nd dealership sale since its founding in 2015 and the firm’s fifth multi-dealership transaction in 2022. With this sale, Kerrigan Advisors remains the most active sell-side advisor to the highest-value transactions in auto retail.

“We were honored to represent these two highly valuable Mercedes dealerships in the Chicagoland market on behalf of the Sunderland and Nocera families. This transaction is an excellent example of the continued strength of the buy/sell market, particularly for top luxury franchises like Mercedes. Many growing groups are seeking to add high volume Mercedes dealerships in major US metros,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. Kerrigan noted that luxury sales are on the rise, outperforming the overall auto retail market (luxury sales increased 24% in 2021, while the overall auto retail market rose only 3.3% despite inventory challenges).

As part of this transaction, Fields is scheduled to acquire and relocate Mercedes-Benz of Bourbonnais to a newly built dealership in Romeoville. With this move, the Orland Park and Romeoville Mercedes-Benz and Sprinter franchises will be the exclusive dealers for Mercedes in the growing southwestern region of Chicago, serving a population of over 650,000.

“When we decided it was the right time to sell, we knew Kerrigan Advisors had the most experience with higher value dealerships. They’ve sold more luxury franchises in the Midwest, particularly Chicago, than any firm in the industry,” said Dan Sunderland, co-owner of Sun Motor Cars of Chicago. “The expertise of the Kerrigan Advisors’ team, particularly Marie Brashears, proved invaluable throughout the sale process and ensured as smooth a closing as possible. We are very grateful they were our advisors and by our side throughout this transaction.”

Opened almost 30 years ago, Mercedes-Benz & Sprinter of Orland Park became one of the highest volume luxury dealerships in Orland Park, the fifth largest luxury market in the Chicago MSA. Under the leadership of David Nocera, a longtime member of Mercedes-Benz Dealer Council, Mercedes-Benz of Orland Park built a reputation for outstanding customer and employee service, receiving numerous awards, including Mercedes’ ‘Best of the Best’ six times and the ‘Employee Choice Best Place to Work Award’ two years in a row.

“Mercedes-Benz & Sprinter of Orland Park are pillars in the south Chicago auto market. The success of these dealerships is built upon the stellar work of our committed, longtime employees and a heartfelt commitment to top customer service,” said David Nocera, co-owner of Mercedes-Benz & Sprinter of Orland Park and Mercedes-Benz of Bourbonnais. “We are grateful to Kerrigan Advisors for identifying the Fields organization as the right buyer to continue our commitment to our customers, employees and community, particularly with the expansion into the Romeoville market. We are excited to see Fields capitalize on their strong brand and enter the south Chicago car market with our stores.”

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 six 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. 

Mark Lyman of Lyman Law Firm provided legal counsel to the seller. Stephen Dietrich and Henry Lowe of Holland & Knight provided legal counsel to the buyer.

About Kerrigan Advisors 

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

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

Kerrigan Advisors Media Contact:

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

Despite negative economic headlines and a volatile stock market, auto retailers continued their expansion through acquisition, with buy/sells increasing 16% YOY, despite spending pullbacks by public retailers, according to the Second Quarter 2022 Blue Sky Report® by Kerrigan Advisors; as dealer balance sheets flush with cash fueled demand, more private buyers entered the market

Incline Village, NV – August 31, 2022– The auto dealership buy/sell market continued its record-breaking activity despite economic headwinds during the second quarter of 2022, up 16% compared to 2021, according to the just-released Blue Sky Report® by Kerrigan Advisors. There were 167 dealership buy/sell transactions reported in the first half of 2022, resulting in 406 transactions for the trailing twelve months ending June 2022[1] – a new industry high.

In the second quarter of 2022, average dealership blue sky values increased to a new record of $12.1 million, a $5.7 million increase in blue sky value since 2019, largely driven by record dealership earnings: for the 12 months ending June 2022, the average dealership earned an estimated $4.3 million, a 207% increase over the pre-pandemic average.

“Today, dealership balance sheets are flush with cash, with current assets nearly double current liabilities, and debt-to-equity is at historically low levels,” said Erin Kerrigan, Founder and Managing Director of Kerrigan Advisors. “Despite multiple unknown variables facing auto retail, the majority of dealers are looking to redeploy their tremendous cash flow back into the industry they know and love, resulting in more demand than supply of dealerships on the market today.”

Kerrigan noted that in the first half of 2022 more private buyers came in the market, and although there were more buyers than sellers, the number of sellers was also on the rise. “As the public retailers’ share of the buy/sell market declined, the largest private dealership groups remained focused on growing through acquisition. In fact, the largest private groups increased their share of the buy/sell market to more than double that of the publics.” 

In the first half of 2022, private buyers accounted for 91% of franchises acquired and the top private dealership groups increased their share of the buy/sell market to 23% -- more than double the publics’ share of 9%. That’s a significant change from 2021, when the publics acquired 29% of franchises sold. Kerrigan Advisors believes that the decline in public spending may be attributed to compression of the publics’ stock prices.

International buyers are also on the rise in 2022. Globally, OEMs are rolling out a new retail agency model, where dealers serve as delivery agents for a set fee. In the US, the agency model faces significant scrutiny by many state associations, especially given state franchise laws. As a result, an increasing number of international dealers are seeking to acquire dealerships in the US where they feel their investment has stronger protections.

“The number of transactions completed by internationally-based acquirers is currently tracking to double last year’s volume. These buyers are highly attracted to the US franchise protections and consider a US franchise acquisition a much sounder investment than one in their home country,” continued Kerrigan. “In some cases, international buyers are willing to pay a price premium to enter the US market and are eager to deploy considerable amounts of capital into US dealership acquisitions.”

The Publics Decrease Acquisition Spending

Compared to the first half of 2021, US public auto retailers’ acquisition spending on US dealerships fell 49% and declined to just 9% share of the buy/sell market – a dramatic reversal from 2021 when the publics dominated the buy/sell market.

“The decline in the publics’ spending could be due to compression of their stock prices,” continued Kerrigan. “They allocated the majority of their capital to stock buybacks, rather than acquisitions in the first half of 2022, which was a reversal of their capital allocation in the first half of 2021.” During the first half of 2022, the six public auto retailers spent more than $2.2 billion on stock buybacks – a 97% increase over the first half of 2021.

Second Quarter 2022 Buy/Sell Trends

Kerrigan Advisors has identified the following three trends which it expects to meaningfully impact the buy/sell market for the remainder of 2022:

·        Blue sky values become harder to assess as record earnings continue for third consecutive year

·        Impact of rising interest rates begins to affect commercial real estate values

·        International dealers increasingly seek US dealership acquisitions due to strength of franchise laws

Kia / Hyundai Franchise Demand; Ford Dealer Skepticism

While Kerrigan Advisors made no adjustments to its blue sky multiples for Q2 2022, the firm upgraded the multiple outlooks for Kia and Hyundai. “During the quarter, we saw a substantial increase in demand for Kia and Hyundai franchises,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Both franchises outperform the market in sales and earnings growth, and dealers are particularly satisfied with their product portfolios. Our expectation is that their multiples will increase in coming quarters if this trend continues.”

During the quarter, Kerrigan Advisors also noted a rise in Ford dealers considering a sale of their franchises. Early results from the 2022 Kerrigan Dealer Survey, which will be published in October, reflect an expectation that the Ford franchise will decline in value over the next 12 months. “We believe that this negative sentiment is a result of the announced changes to the Ford franchise model, particularly with electrification, and a growing distrust of the OEM’s plans for future dealership profitability,” continued Ryan Kerrigan. 

Highlights from the Q2 2022 Blue Sky Report® by Kerrigan Advisors include:

·        167 dealership buy/sell transactions reported in the first half of 2022 resulting in 406 transactions for the twelve months ending June 2022.

·        In the second quarter of 2022, average dealership blue sky value increased to a new record of $12.1 million, a $5.7 million increase in blue sky value since 2019.

·        42 multi-dealership transactions, representing 25% of the buy/sell market, closed in the first half of 2022, a decline of 18% relative to 2021. Kerrigan Advisors attributes the decline in multi-dealership transactions to rising interest rates and valuation declines in the stock market.

·        Private buyers acquired 91% of franchises sold with the top 144 private dealership groups growing their share of the buy/sell market to 23%, more than double that of the publics.

·        Domestic franchise share of the buy/sell market remains below 50% and is now 26% below their franchise market share of 66%.

·        Import non-luxury franchises increased their share of the buy/sell market to 39% in the first half of 2022, demonstrating the strength of their business model and profit outlook.

·        Nearly as many Toyota franchises traded hands as Chevrolet, Ford and CJDR, despite having 56% fewer franchises in the market.

·        During the first half of 2022, public auto retailers spent more than $2.2 billion on stock buybacks – a 97% increase over the first half of 2021 and spending on acquisitions declined by 49% compared to the first half of 2021.

·        The Kerrigan Index™ declined 16% year-to-date through July 2022, underperforming the broader market. With lower market capitalizations, acquisitions become more difficult for the publics to justify, in part because fewer are accretive to earnings. 

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