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.