Dealership acquisitions fizzle in 2023

Written by:
Automotive News
June 30, 2024

Uncertainty and a widening bid-ask spread contributed to fewer transactions last year, according to industry experts..

Although merger and acquisition activity remained high, 2023 saw fewer transactions compared to 2022, attributed to economic uncertainty, lower profits, and a pricing gap between buyers and sellers.

Erin Kerrigan of Kerrigan Advisors highlighted a shift in buyer focus, stating that the market had splintered into "have" and "have not" franchises.

She noted, "The rising tide lifted all boats during the pandemic, and every franchise was very valuable and sought-after because everyone was doing so well, and there was so much capital, there was a strong demand to buy, really, almost any franchise."

However, Kerrigan pointed out that buyers are now "very much looking for top franchises in markets that make strategic sense, or top franchises in growth markets."

Now, she said, buyers have sharpened their pencils, and "they're very much looking for top franchises in markets that make strategic sense, or top franchises in growth markets."

Several deals last year highlighted that, including when Kerrigan Advisors represented John Beck and James Masten in selling three General Motors dealerships in Texas to publicly traded Group 1 Automotive Inc. Those stores were expected to add $760 million in annual revenue.

Click here to read the full article [may require a subscription].

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 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—2023 Kerrigan OEM Survey, click here.—Kerrigan Advisors also is the co-author of NADA's Guide to Buying and Selling a Dealership.

Share this post
In The News

We look forward to connecting with you.

Contact us to learn more about Kerrigan Advisors’ sell-side services.
All of our conversations are 100% confidential.