Date published: March 23, 2017
Sellers coming back into market, improved valuations, private buyer demand for large acquisitions, advantageous market fluctuations and ‘Trump Bump’ driving optimism in buy/sell market; Ford, Chevrolet, Toyota, Honda and Subaru top buyer targets
IRVINE, Calif.--(BUSINESS WIRE)--Buy/Sell auto dealership activity is set to rebound to record levels in 2017, according to The Blue Sky Report®, a Kerrigan Quarterly, which today released its analysis for the full year 2016. Although there was a slight decline (8%) in overall transaction activity in 2016, and rising real estate costs are set to present a challenge for buyers, an increase in serious sellers coming back into market, improved valuations, private buyer demand for large acquisitions, advantageous market fluctuations, and the Trump Bump are driving optimism for a robust 2017.
“Most dealers understand that the opportunity has passed to obtain above-market blue sky prices and, instead, are satisfied knowing that today’s valuation levels are still very high, particularly on a historic basis,” said Erin Kerrigan, Managing Director of Kerrigan Advisors. “Buyers are finding pricing more reasonable in part because today’s sellers are serious about a sale. The market testers who were seeking 'crazy' blue sky values have primarily returned to operating their businesses, discovering those unrealistic values were not attainable.”
The report from Kerrigan Advisors is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership mergers and acquisition activity and franchise values. Laying out the high, average and low multiples for each franchise in the luxury and non-luxury segments for the quarter, the report offers a detailed view of public and private company dealership acquisition activity. Key findings from the report include:
The report also identifies the following four market trends, which Kerrigan Advisors expects to affect the buy/sell market in 2017 and beyond.
“Overall, we expect 2017 to be a very active year for buy/sells with private and more public buyers eager to put their capital to work. We find an increasing number of sellers coming to market motivated by current prices and a strong desire to capitalize on today’s buy/sell activity,” continued Kerrigan. “As more dealers find their succession plans have run their course, we expect the number of sellers to rise given the generational shifts underway in auto retail and the ageing of the US dealer network.”
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. The multiples are based on Kerrigan Advisors’ view of franchise values in the current buy/sell market and can be applied to adjusted pre-tax dealership earnings to estimate blue sky value. To download the report, click here.
Kerrigan Advisors also releases a monthly index, The Kerrigan Auto Retail 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.
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 and the Wall Street Journal. For a video reel of Erin’s commentary on the market, click here.
About Kerrigan Advisors
Kerrigan Advisors is a national dealership buy/sell advisory firm focused on providing a high level of client service for dealership sellers. Led by a team of veteran advisors who have represented transactions totaling over $2.5 billion dollars in automotive, private equity and investment banking, Kerrigan Advisors customizes each sale process to maximize the seller’s transaction proceeds. With the most comprehensive buyer database in the industry, Kerrigan Advisors has the industry context and expertise to match each seller with the right buyer.
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. Her expertise is also featured in a monthly column for Dealer Magazine.
*The Banks Report/Kerrigan Advisors analysis
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.