Dealership Acquisitions Are On the Rise

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Accord­ing to a recent Auto­mo­tive Retail Buy-Sell Report from the Pre­sidio Group LLC, the mar­ket is cur­rently white-hot for deal­er­ship purchases.

Learn more about why deal­er­ship acqui­si­tions are a hot com­mod­ity right now.

The mar­ket is white-hot for deal­er­ship pur­chases right now, and it appears that pub­lic and pri­vate groups are both aggres­sively going after acquisitions.

That’s accord­ing to the mid-year Auto­mo­tive Retail Buy-Sell Report from the Pre­sidio Group LLC, which said the value propo­si­tion of a deal­er­ship is quite strong.

In fact, when look­ing at pri­vate buy­ers alone, there were 2.5 times more deal­er­ships pur­chased in the first half of the year than the same period of 2012, accord­ing to the report.

For pub­lic groups, they spent $133 mil­lion on U.S. acqui­si­tions in the first half of the year, which is an 8-percent year-over-year increase.

Inter­na­tion­ally, their num­bers are up 17 per­cent at $248 million.

“The win­dow is wide open for deal­ers who are inter­ested in retir­ing and/or sell­ing their busi­nesses,” said Alan Haig, Head of Auto­mo­tive Ser­vices at Pre­sidio Mer­chant Part­ners LLC, the invest­ment bank­ing arm of The Pre­sidio Group.

“Deal­er­ship val­ues are high because prof­its are strong, and there are more buy­ers than sell­ers in the mar­ket today. We’re also see­ing more deals done at higher prices,” he added.

“Trans­ac­tion val­ues of $50 mil­lion or more used to be pretty rare, but now there is greater inter­est in deals of this size from both pub­lic and pri­vate deal­er­ship groups. In fact, pri­vate groups may be the most aggres­sive buy­ers at this time.”

The Pre­sidio Group lists sev­eral fac­tors lead­ing to more acqui­si­tions, includ­ing dealer prof­its that have approached or reach all-time highs and greater desir­abil­ity among the fran­chises com­pared to prior years. The com­pany also said that the return on invest­ment from buy­ing a deal­er­ship tends to be stronger than other purchases.

Addi­tion­ally, there are more suit­ors look­ing to pur­chase deal­er­ships than there are deal­er­ships will­ing to sell.

 

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