On the latest Kerrigan Report for the month of November, Ryan Kerrigan, Managing Partner of Kerrigan Advisors joins CBT News to discuss the latest trends and market updates.
In the buy-sell market, the number of completed transactions has increased to 186 this year, compared to 181 from the previous year, a 16% increase. He says they expect the velocity of transactions to ramp up through the end of the year, and he attributes the rise to the automotive industry’s incredible rebound from the shutdowns back in the spring. The industry saw an impressive 94% jump in average dealership pre-tax profits. Kerrigan says it is a great time in the automotive industry, bringing more interest to mergers and acquisitions.
The limited amount of inventory enabled hirer grosses. If industry earnings continue at their current pace, 2020 will be the most profitable year on record. The Kerrigan Index has seen a strong rebound as it is currently up 23%.
Kerrigan says that large dealership groups are being driven to sell based on dealer families seeing the lifecycle of their dealership play out. The business continues to change and many dealer families are very wealthy. Valuations of auto groups continue to be very high making it a great time to sell.
Kerrigan concludes the conversation by answering if there are more sellers or buyers in the buy-sell market. He says that there are currently more sellers, however, he says there isn’t a lack of buyers in the market either. Buyers are very focused on building scale as they continue growing their business.