Dealership consolidation boosts acquisition financing

Written by:
Automotive News
April 27, 2023

Buy/sell activity increased 25% YoY Q1-Q3 2022A shift toward dealership consolidation is likely to contribute to an uptick in acquisition financingand growth in floorplan lenders' portfolios.Dealership buy/sell activity decreased 2.4% year over year in 2022 with 374 dealershiptransactions completed by yearend, according to Kerrigan Advisors' 2022 annual Blue Sky Report. Still, the overall decline was offset by a 25% YoY increase in transactions during the first three quarters of 2022.The share of dealership groups with 11 or more dealerships increased 127% compared with 2010, while groups with 5 or fewer dealerships saw a 4% decline in share versus 2010, according to the report."Directionally where we see the industry continuing to head is dealers with more dealerships, and those dealers as they get larger tap the financial markets more often for their acquisitions" Erin Kerrigan , founder and managing director of Kerrigan Advisors, told Auto Finance News. "We see the industry transitioning from an industry that had more 'mom and pop' characteristics to increasingly professionally managed businesses that have significant relationships with financial institutions to enable them to fund major expansion."

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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.

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