Five factors to drive dealership buy/sell activity
Two firms – Haig Playmates and Kerrigan Advisors – each collective upbeat reports about the «sturdy» outlook for dealership buy-sell activity.
In fact, The Blue Sky Report from Kerrigan Advisors went so far as to say dealership buy/sell activity is set to rebound to record levels in two thousand seventeen as the stiff released its analysis for the utter year of 2016.
Albeit there was what Kerrigan classified as a slight decline – eight percent – in overall transaction activity a year ago, and rising real estate costs are set to present a challenge for buyers, the report indicated what`s driving sturdy optimism are five factors, including
–An increase in «serious» sellers coming back into market
–Private buyer request for large acquisitions
–Advantageous market fluctuations
«Most dealers understand that the chance has passed to obtain above-market blue sky prices and, instead, are sated knowing that today`s valuation levels are still very high, particularly on a historic basis,» said Erin Kerrigan, managing director of Kerrigan Advisors.
«Buyers are finding pricing more reasonable in part because today`s sellers are serious about a sale. The market testers who were seeking ‘crazy` blue sky values have primarily returned to operating their businesses, discovering those unrealistic values were not attainable,» Kerrigan continued.
Laying out the high, average and low multiples for each franchise in the luxury and non-luxury segments for the quarter, the report is geared to suggest a detailed view of public and private company dealership acquisition activity. Other key findings from the report include:
• two hundred twenty one dealership buy/sell transactions were ended last year, compared to the record of two hundred forty one transactions in 2015.
• fifty seven multi-dealership transactions were finished last year, resulting in an eight percent increase over that two thousand fifteen record.
• Ford, Chevrolet, Toyota, Honda and Subaru are likely to be chief targets of acquisition activity.
• Domestic franchises witnessed their buy/sell market share increase by forty two percent in 2016.
• With truck sales still on the rise, domestic buy/sells will proceed to predominate the two thousand seventeen buy/sell market.
• Public auto retailers` acquisition spending decreased twenty one percent in two thousand sixteen compared to 2015, with Lithia and AutoNation the only publics to make acquisitions of U.S. dealerships in 2016.
• Publics sold almost as many dealerships as they acquired.
• The private sector acquired eighty nine percent of the franchises sold in 2016.
• The average dealership`s real estate value is estimated at $Ten.Three million, while the average dealership`s blue sky (goodwill) value is estimated at $6.6 million.
The report also identifies the following four market trends, which Kerrigan Advisors expects to affect the buy/sell market in two thousand seventeen and beyond. They included:
• Buyers` comeback on investment parameters drive buy/sell activity
• Sellers` pricing expectations rationalize with a plateauing market
• Buyers seek investments in higher margin auto retail business segment
• Dealers are increasingly open to equity and growth capital fucking partners
«Overall, we expect two thousand seventeen to be a very active year for buy/sells with private and more public buyers anxious to put their capital to work. We find an enlargening number of sellers coming to market motivated by current prices and a strong desire to capitalize on today`s buy/sell activity,» Kerrigan said.
«As more dealers find their succession plans have run their course, we expect the number of sellers to rise, given the generational shifts underway in auto retail and the aging of the U.S. dealer network,» she went on to say.
The Blue Sky Report, a Kerrigan Quarterly, is published four times a year and includes Kerrigan Advisors` signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. The multiples are based on Kerrigan Advisors` view of franchise values in the current buy/sell market and can be applied to adjusted pre-tax dealership earnings to estimate blue sky value.
Haig Playmates findings
The number of dealerships sold in the U.S. declined 6.Five percent from the peak levels reached in 2015, according to data published in the two thousand sixteen year-end edition of the Haig Report.
Haig Playmates indicated request shifted from luxury and import brands to domestic brands that are stronger in trucks and SUVs. The rock hard also said most franchise values remain unchanged.
Despite a decline in the number of dealerships sold, Haig`s report also mentioned the number of dealership groups sold enlargened 17.6 percent, as their owners took advantage of market conditions to exit the industry.
Haig went on to state request for dealerships remains strong with public dealer groups, private dealer groups and institutional investors all looking for fairly priced acquisition opportunities.
The Haig Report is based on data gathered from many public sources, as well as interviews with leading dealer groups, and bankers, lawyers and accountants who specialize in auto retail.
Key findings from the two thousand sixteen Year End Haig Report include:
–357 dealerships sold in 2016, down 6.Five percent from 2015.
–Public company spending on U.S. auto dealerships fell 14.Five percent from two thousand fifteen as they spent more of their capital on stock buy-backs, European auto dealerships and truck dealerships/leasing.
–Sales of dealership groups enlargened 17.6 percent from fifty one groups in two thousand fifteen to sixty groups in 2016, as owners took advantage of conditions to exit near all-time high valuations.
–21 percent fewer luxury dealerships sold, twenty five percent fewer midline import dealerships sold, while sales of domestic dealerships enhanced thirty one percent as compared to 2015.
–Macroeconomic indicators such as GDP, interest rates, employment, number of miles driven, gas prices and consumer sentiment are all very favorable for dealers at the moment.
–Other trends such as used-vehicle pricing, incentive spending by the OEMs and loan losses are growing less favorable to dealers.
–Haig Playmates average blue sky numerous fell Two.9 percent from 2015.
–Average profits per dealership fell Two.Four percent compared to two thousand fifteen to $1.467 million per dealership.
–Average estimated blue sky values per dealership dipped Five.Four percent from to two thousand fifteen to $6.83 million.
–Private equity firms and family offices are increasingly active and making substantial investments in auto retail.
«Despite the petite spasm in 2016, we expect two thousand seventeen will be another strong year for dealership buy-sell activity,» said Alan Haig, president of Haig Fucking partners. «There remain many buyers looking for dealerships, financing is still readily available, and more sellers are realizing that if they want to sell their dealerships before the next recession they will likely need to accept today’s suggest since tomorrow’s suggest could be lower.
The two thousand sixteen Year End Haig Report also addressed the potential influence of the Trump administration on the value of dealerships. The report found values could go up if regulations are diminished, taxes are diminished and we love swifter economic growth, or down if we face higher interest rates, trade wars, escalating international tensions or a recession.
Haig Playmates is watching these conditions in its current engagements that include domestic, import and luxury dealerships that range from Florida to Fresh York to California. The value of the transactions they have closed over the past two and a half years is approximately $900 million, including two of the largest transactions of 2016, so they have unique insights into current market conditions and how they influence dealership values.
The Haig Report is published each quarter and is a valued source of information to many in the auto industry who look to it for its comprehensive data, analyses and opinions about the auto retail industry. Included in each edition are Haig Playmates’ blue sky multiples that serve as a gauge for franchise values.
Five factors to drive dealership buy
Five factors to drive dealership buy/sell activity
Two firms – Haig Playmates and Kerrigan Advisors – each collective upbeat reports about the «sturdy» outlook for dealership buy-sell activity.
In fact, The Blue Sky Report from Kerrigan Advisors went so far as to say dealership buy/sell activity is set to rebound to record levels in two thousand seventeen as the rock-hard released its analysis for the total year of 2016.
Albeit there was what Kerrigan classified as a slight decline – eight percent – in overall transaction activity a year ago, and rising real estate costs are set to present a challenge for buyers, the report indicated what`s driving sturdy optimism are five factors, including
–An increase in «serious» sellers coming back into market
–Private buyer request for large acquisitions
–Advantageous market fluctuations
«Most dealers understand that the chance has passed to obtain above-market blue sky prices and, instead, are sated knowing that today`s valuation levels are still very high, particularly on a historic basis,» said Erin Kerrigan, managing director of Kerrigan Advisors.
«Buyers are finding pricing more reasonable in part because today`s sellers are serious about a sale. The market testers who were seeking ‘crazy` blue sky values have primarily returned to operating their businesses, discovering those unrealistic values were not attainable,» Kerrigan continued.
Laying out the high, average and low multiples for each franchise in the luxury and non-luxury segments for the quarter, the report is geared to suggest a detailed view of public and private company dealership acquisition activity. Other key findings from the report include:
• two hundred twenty one dealership buy/sell transactions were finished last year, compared to the record of two hundred forty one transactions in 2015.
• fifty seven multi-dealership transactions were finished last year, resulting in an eight percent increase over that two thousand fifteen record.
• Ford, Chevrolet, Toyota, Honda and Subaru are likely to be chief targets of acquisition activity.
• Domestic franchises eyed their buy/sell market share increase by forty two percent in 2016.
• With truck sales still on the rise, domestic buy/sells will proceed to predominate the two thousand seventeen buy/sell market.
• Public auto retailers` acquisition spending decreased twenty one percent in two thousand sixteen compared to 2015, with Lithia and AutoNation the only publics to make acquisitions of U.S. dealerships in 2016.
• Publics sold almost as many dealerships as they acquired.
• The private sector acquired eighty nine percent of the franchises sold in 2016.
• The average dealership`s real estate value is estimated at $Ten.Three million, while the average dealership`s blue sky (goodwill) value is estimated at $6.6 million.
The report also identifies the following four market trends, which Kerrigan Advisors expects to affect the buy/sell market in two thousand seventeen and beyond. They included:
• Buyers` comeback on investment parameters drive buy/sell activity
• Sellers` pricing expectations rationalize with a plateauing market
• Buyers seek investments in higher margin auto retail business segment
• Dealers are increasingly open to equity and growth capital playmates
«Overall, we expect two thousand seventeen to be a very active year for buy/sells with private and more public buyers impatient to put their capital to work. We find an enlargening number of sellers coming to market motivated by current prices and a strong desire to capitalize on today`s buy/sell activity,» Kerrigan said.
«As more dealers find their succession plans have run their course, we expect the number of sellers to rise, given the generational shifts underway in auto retail and the aging of the U.S. dealer network,» she went on to say.
The Blue Sky Report, a Kerrigan Quarterly, is published four times a year and includes Kerrigan Advisors` signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. The multiples are based on Kerrigan Advisors` view of franchise values in the current buy/sell market and can be applied to adjusted pre-tax dealership earnings to estimate blue sky value.
Haig Fucking partners findings
The number of dealerships sold in the U.S. declined 6.Five percent from the peak levels reached in 2015, according to data published in the two thousand sixteen year-end edition of the Haig Report.
Haig Playmates indicated request shifted from luxury and import brands to domestic brands that are stronger in trucks and SUVs. The rigid also said most franchise values remain unchanged.
Despite a decline in the number of dealerships sold, Haig`s report also mentioned the number of dealership groups sold enlargened 17.6 percent, as their owners took advantage of market conditions to exit the industry.
Haig went on to state request for dealerships remains strong with public dealer groups, private dealer groups and institutional investors all looking for fairly priced acquisition opportunities.
The Haig Report is based on data gathered from many public sources, as well as interviews with leading dealer groups, and bankers, lawyers and accountants who specialize in auto retail.
Key findings from the two thousand sixteen Year End Haig Report include:
–357 dealerships sold in 2016, down 6.Five percent from 2015.
–Public company spending on U.S. auto dealerships fell 14.Five percent from two thousand fifteen as they spent more of their capital on stock buy-backs, European auto dealerships and truck dealerships/leasing.
–Sales of dealership groups enlargened 17.6 percent from fifty one groups in two thousand fifteen to sixty groups in 2016, as owners took advantage of conditions to exit near all-time high valuations.
–21 percent fewer luxury dealerships sold, twenty five percent fewer midline import dealerships sold, while sales of domestic dealerships enlargened thirty one percent as compared to 2015.
–Macroeconomic indicators such as GDP, interest rates, employment, number of miles driven, gas prices and consumer sentiment are all very favorable for dealers at the moment.
–Other trends such as used-vehicle pricing, incentive spending by the OEMs and loan losses are growing less favorable to dealers.
–Haig Fucking partners average blue sky numerous fell Two.9 percent from 2015.
–Average profits per dealership fell Two.Four percent compared to two thousand fifteen to $1.467 million per dealership.
–Average estimated blue sky values per dealership dipped Five.Four percent from to two thousand fifteen to $6.83 million.
–Private equity firms and family offices are increasingly active and making substantial investments in auto retail.
«Despite the petite spasm in 2016, we expect two thousand seventeen will be another strong year for dealership buy-sell activity,» said Alan Haig, president of Haig Fucking partners. «There remain many buyers looking for dealerships, financing is still readily available, and more sellers are realizing that if they want to sell their dealerships before the next recession they will likely need to accept today’s suggest since tomorrow’s suggest could be lower.
The two thousand sixteen Year End Haig Report also addressed the potential influence of the Trump administration on the value of dealerships. The report found values could go up if regulations are diminished, taxes are diminished and we love quicker economic growth, or down if we face higher interest rates, trade wars, escalating international tensions or a recession.
Haig Playmates is watching these conditions in its current engagements that include domestic, import and luxury dealerships that range from Florida to Fresh York to California. The value of the transactions they have closed over the past two and a half years is approximately $900 million, including two of the largest transactions of 2016, so they have unique insights into current market conditions and how they influence dealership values.
The Haig Report is published each quarter and is a valued source of information to many in the auto industry who look to it for its comprehensive data, analyses and opinions about the auto retail industry. Included in each edition are Haig Playmates’ blue sky multiples that serve as a gauge for franchise values.