While differing on how first-quarter activity unfolded, both Kerrigan Advisors and Haig Partners shared upbeat assessments of dealership buying and selling activity for the rest of 2017 as each used the adjective, "robust."
First, at Kerrigan Advisors, the firm reported that the action of dealerships changing hands “remains robust” for Q1 in spite of slowing vehicle sales and a slight dip in Blue Sky Values. According to The Blue Sky Report, a Kerrigan Quarterly, any negative headwinds are being offset by high dealership real estate prices.
Outpaced by the private companies in acquisition activity, Kerrigan Advisors indicated that publicly traded dealer groups are directing their focus to non-U.S. acquisitions. According to the report, macro-economic conditions, which offer opportunities for both optimism and pessimism, are contributing to a high level of activity in the buy/sell market, which is expected to continue throughout the year.
Kerrigan Advisors managing director Erin Kerrigan said, “2017’s buy/sell market is fueled by diverging viewpoints from conservative sellers and ambitious buyers — and is influenced by consistently high real estate valuations. Those confident in the long-term health of auto retail continue to seek acquisitions and investments.
“By contrast, the pessimists, and those who are generationally ready to go out on a high note, are increasingly choosing to exit the market, selling their dealerships at today’s high prices and avoiding a potential downturn. All of which contributes to a very active and robust buy/sell market,” Kerrigan continued in a news release.
Other key findings from Kerrigan Advisors’ Q1 2017 report include:
The report also identified the following three market trends, which Kerrigan Advisors expects to affect the buy/sell market in 2017 and beyond. That group includes:
“Overall, we continue to expect 2017 to be a very active year for buy/sells with private buyers, new entrants and certain public buyers eager to put their capital to work. An increasing number of sellers are coming to market motivated by current prices and a strong desire to capitalize on today’s buy/sell activity,” Kerrigan said.
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.