Dealership Deals Run in the Fast Lane

Written by:
Subrina Hudson
LA Business Journal
September 3, 2018

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.

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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