Despite slight cooling due to economic headwinds, the buy-sell market remains active and thriving in 2025. In today’s episode of Driving Solutions, host Jim Fitzpatrick is joined by Erin Kerrigan, managing director of Kerrigan Advisors, to discuss the current state of the buy-sell market and the findings of the firm’s latest Q1 Blue Sky Report®.
According to the report, buy-sell activity in the first quarter of 2025 was down by 14% compared to the same period last year. Still, it remained 70% higher than the pre-pandemic average, with an annualized pace of 375 transactions. This pace suggests that the market is continuing to advance at an elevated pace despite short-term uncertainty.
The Kerrigan Advisors predict that 2025 will be a slightly slower year than 2024, but the broader trajectory remains strong.
"The growth mentality is alive and well. Buyers are saying, 'I need to be one of the top 150.' A lot of folks are doubling down on their plans to grow."
One surprising trend revealed by the report is the shift in momentum between buyers and sellers. Despite economic turbulence, buyers aren’t pulling back — in fact, they’re doubling down on acquisitions. On the other hand, sellers are hesitant and wary of initiating a transaction if they perceive weakness in the market.
The first quarter saw a significant decline in the number of franchises changing hands, with 134 franchises transacting compared to 234 a year ago — a 43% drop.
However, Kerrigan notes that the comparison is slightly skewed by Holman’s acquisition of Leith Automotive Group, which involved more than 30 stores.
Multi-store deals fell sharply. Nearly 80% of first-quarter transactions were single-store transactions, and multi-dealer transactions declined by 39%.
There is a heightened level of volatility in the market, with the Volatility Index (VIX) hitting its 18th-highest level on record in the first half of the year. Meanwhile, the Kerrigan Index fell 20% after reaching an all-time high in February.
Still, dealership valuations remain strong. First-quarter earnings increased by an average of 7%, marking the first time the industry has seen both year-over-year and quarter-over-quarter gains since the pandemic. As a result, the Blue Sky Index remained flat but continues to sit 70% above pre-pandemic levels.
While tariff concerns are causing some hesitation, Kerrigan doesn’t believe they will cause significant disruption to the buy-sell market. She predicts that once there is additional clarity or resolution, the market could experience a substantial surge in transaction activity.
OEMs, such as Mazda that don’t have a manufacturing footprint in the U.S. are exposed to tariff impact and will need to navigate the situation carefully.
Due to tariff uncertainty, Kerrigan Advisors will not adjust its valuation multiples until more information or clarity becomes available.
As buyers become more selective, regional market share is playing a larger role in acquisition strategies. Kerrigan predicts that over the next decade, major regions and metro areas will become significantly more consolidated, resulting in a dramatic reduction of single-point dealers.
The Kerrigan OEM Survey, which queried more than 100 OEM executives, revealed a generally positive outlook on dealership profitability and valuations in 2025. However, 76% of executives expect Chinese automakers to enter the U.S. market, and 70% express concern about the financial impact due to the global market share loss caused by Chinese brands.
Despite the concerns, Kerrigan believes the U.S. is in a strong position. With legacy OEMS losing ground in China, the world’s largest auto market, they cannot afford to lose share in the U.S. market. As a result, they will fight aggressively to maintain their presence and profitability in the United States.
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 more than 290 dealerships generating more than $9 billion in client proceeds, including two of the largest transactions in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group and Leith Automotive to Holman. 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 is the only firm in auto retail exclusively dedicated to sell-side advisory, providing its clients the assurance of a conflict-free approach.
Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, the industry authority on dealership buy/sell market trends and valuations and 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 The Kerrigan Index™ comprised 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 2024 Kerrigan Dealer Survey, click here. To read the 2025 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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