Sales of automotive dealerships are in overdrive. That means Irvine-based sell-side advisory firm Kerrigan Advisors is enjoying life in the fast lane.
In late August, it helped owner Car Pros Automotive Group in Renton, Wash., hand over the keys to the Carson Kia dealership in Carson to Trophy Automotive Dealer Group in Glendale for an undisclosed sum, which industry sources pegged in excess of $50 million. The Carson dealership is a flagship for Kia Motors North America, whose operations are based in Irvine.
It’s also part of the highest-volume Kia dealership group in the U.S. since 2016, according to Kerrigan, which has brokered sales for more than 72 dealerships in three years representing over $1 billion in client sales.
The motor trend has arrived in Orange County, as well; property records and other reports show that more than $150 million worth of dealership properties have changed hands this year, the largest of those deals closing this summer.
Managing Director Ryan Kerrigan expects the pace to continue for the next five years.
“We’re seeing continued consolidation throughout our industry,” Kerrigan said. “In the last five years, there’s been an average of 200 transactions per year across the country.”
A big driver of the sales spike “is [that] the larger groups are finding cost efficiencies and successfully driving down costs relative to the smaller dealership groups,” he said.
In Orange County, two big auto dealerships traded hands this summer.
Orange Coast Acura, formerly South Coast Acura, sold to Costa Mesa- based Orange Coast Auto Group this month for an undisclosed price.
Orange Coast Auto now has six dealerships, all in Costa Mesa and along the city’s Harbor Boulevard hub of dealerships, including the just-purchased Acura site.
Meanwhile, BMW of Buena Park, formerly Shelly BMW, sold to Fort Lauderdale, Fla.-based auto retailer AutoNation Inc. in June for what knowledgeable sources said was $54 million.
Sales Traffic
While Car Pros Chairman and founder Ken Phillips sold Carson Kia as a step toward retirement, industry players are reporting that increasing industry consolidation is powering the increase in dealership sales traffic.
“Not every buyer would be willing to pay up for this kind of store because [Carson Kia] is overperforming so dramatically,” Kerrigan said. “However, there was significant interest on the part of larger dealership groups.”
Public companies, such as AutoNation (NYSE: AN), and Penske Automotive Group (NYSE: PAG) in Bloomfield Hills, Mich., are close to spending a record $1 billion on U.S. acquisitions this year.
Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 275 dealerships representing nearly $9 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. 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. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor 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 Dealer Survey, click here. To read the 2024 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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