COVID has pushed more sellers to the market than usual, says Erin Kerrigan, founder of Kerrigan Advisors. She says year-to-date dealership acquisitions were up about 16% as of the third quarter, to 186 transactions.
COVID-19 provided an extra push for some, but fundamentally the unusually large number of auto dealers selling their businesses in the current environment are doing so for the classic reasons dealers always sell, according to interviews with dealership brokers.
Those typical reasons include age; the lack of a family successor; reluctance to make a big, new investment, such as a factory-mandated facility upgrade or new information technology; plus, opportunistic selling based on favorable pricing, brokers say. The point is, there’s not a sudden, panicky rush to the exits, according to the experts.
Still, the pandemic does play a role for some selling dealers, and that’s to “fast-forward” existing business trends many dealers see as a burden, such as the need to ramp up online selling, says Erin Kerrigan, founder and managing director of Kerrigan Advisors, Irvine, CA.
“Yes, to all the underlying reasons you cite,” Kerrigan says in a phone interview. “But COVID has added fuel to the fire and driven more sellers to the market than we have typically seen.”
According to Kerrigan’s Blue Sky Report for the third quarter, “2020 is on track to be the most active buy/sell market on record.”
She says year-to-date dealership acquisitions were up about 16% as of the third quarter, to 186 transactions. The market looks as if it will stay hot in 2021, she adds.
George Karolis, president of the Presidio Group, Duluth, GA, says the number of sellers is high, but the number of would-be buyers is even higher. He also expects demand for dealerships to remain robust in 2021.
“There’s more sellers, but there’s more active buyers, buyers interested in acquiring. Today, we get phone calls from buyers – I wouldn’t say begging, but they want to buy stores,” Karolis says.
“They are looking, and they are asking us to show them stores. That’s a pretty positive sign. In the past, we weren’t necessarily getting calls like that,” he says.
Alan Haig, president of Haig Partners, Fort Lauderdale, FL, says the demand for dealerships isn’t an out-of-control “San Francisco gold rush.” But he says values are on the rise, “which indicates there really are more buyers than sellers.”
Kerrigan Advisors is honored to work with auto retailers throughout the US to enhance the value of their enterprise. Learn more about our services below:
Customized and confidential sell-side services for higher value dealerships and dealership groups nationwide, with a proven record of achieving the highest sale price per transaction of any firm in the industry.
Capital raising and partnership structuring for growing dealership groups, supported by the largest investor database in the industry.
If you are a buyer in today’s market, Kerrigan Advisors welcomes the opportunity to learn about your acquisition criteria and include you in Kerrigan Advisors’ proprietary Buyer Database.
We welcome the chance to learn more about your acquisition criteria so that we can contact you in the event a client matches your investment profile.
Contact us to learn more about Kerrigan Advisors’ client services, or to have a conversation about the buy/sell market. All of our conversations are 100% confidential.