Digital Dealer - November 2017 - 9

By Ryan Kerrigan
Managing Director,
Kerrigan Advisors

// Ownership

Is a Financial
Partnership in
Your Future?

we estimate this type of
non-traditional transaction structure represented 17% of the buy/sell
market, a significant shift
from prior years. (See
chart 1)
We believe that the
primary driver of this dynamic is the overall cost
of a typical acquisition.
Kerrigan Advisors pegs
Some Considerthe average dealership
such as Todd Blue, repre- can clearly supercharge
value (including blue
a dealer's growth plans,
sent the next generation
ations for Dealers
sky and real estate, but
eliminating the conof aggressive
growth-oriEstimated	Number	of	Dealerships	Purchased		with	50%	or	More	Outside	Capital*
in Growth Mode
excluding working capital
straints
of
organic
growth.
ented
dealers
who
are
2014
26
and fixed assets) at $17.0
According to our analwilling to partner with the
In our industry today,
2015
51
million! That is no small
ysis, we estimate there
right capital source to
partnering with
2016
40
deal and not one that a
build out their platforms in were 40 transactions in
professional capital is a
2017	YTD
dealer can easily acquire
2016 in which the seller
the accelerated 47
timeline
significant discussion
without an outside capital
sold less than 100% of
they desire. Working with
thread. Namely, selling
the business. Since 2014,
an outside capital partner
less than 100% of the
Continued on pg. 10
business and joining
CHART 1
forces with outside capital
for the purposes of
Estimated Number of Dealerships Purchased
accelerated growth and
Estimated
Number
of Dealerships
with 50%
or More Outside
Capital*
dealership acquisitions is
Purchased
with
50%
or
More
Outside
Capital*
becoming more common.
This is in contrast to the
51
historical industry norm of
47
an outright sale.
40
I am aware of an increasing number of these
transactions. For exam26
ple, Todd Blue and the Indigo Auto Group recently
announced a significant
strategic investment from
PON, a multi-billion dollar
European automotive
conglomerate. Similarly,
we have two clients, both
2014
2015
2016
2017 YTD
with considerable deal*Outside Capital includes Private Equity, high net worth investors, and Family Offices
Excludes Berkshire Hathaway/Van Tuyl acquisition in 2015
ership platforms, seeking
capital investment in their
businesses.
Source: Kerrigan Advisors Research, The Banks Report, and Automotive News
WHAT IS DRIVING
THIS INTERESTING
DYNAMIC?

Note: This graph does not reflect transactions, but rather dealerships.
* Outside Capital includes private equity, high net-worth investors, and family offices. Excludes Berkshire Hathaway/Van
Tuyl acquisitions in 2015.

Young entrepreneurs,
D I G I TA L D E A L E R . C O M

NOVEMBER 2017

9



http://www.DIGITALDEALER.COM

Table of Contents for the Digital Edition of Digital Dealer - November 2017

Digital Dealer - November 2017
Contents
A Letter from the Show Director
Don’t Be a “Management Jerk” and Steps for Handling Them!
Attempting a No-Huddle Offense? How’s That Working for You?
Is a Financial Partnership in Your Future?
Fallacy
You Can't Take a Train 500 Miles on 400 Miles of Track
4 Tech Tools That Decrease Employee Turnover
Organize for 2018 – Expect Greater Efficiencies and Profitability, Fewer Surprises
Retail Warranty Reimbursement: Leveling the Playing Field
Cracking the Car Code on Selling to the #1 Buyer: Women
Professional Voice-Over Secrets!
CAMERON JOHNSON Dealer Principal, Magic City Ford Lincoln
When It Comes to Social Media... Don't Step on a Rake
The Online Shopping Experience Has Radically Changed. Your Dealership Can Reap the Benefits.
The New Car Manager's Modern Guide to Merchandising
Top 3 Information Technology (IT) Recommendations for Stability and Increased Productivity at Your Dealership
That’ll Bee $128 Forda Tech Ta Lookatit - Ouchie
Only 5 ½ Cents- Per-Mile to Maintain a $50K Machine! Wow!
Digital Dealer - November 2017 - Digital Dealer - November 2017
Digital Dealer - November 2017 - Cover2
Digital Dealer - November 2017 - Contents
Digital Dealer - November 2017 - A Letter from the Show Director
Digital Dealer - November 2017 - 3
Digital Dealer - November 2017 - Don’t Be a “Management Jerk” and Steps for Handling Them!
Digital Dealer - November 2017 - 5
Digital Dealer - November 2017 - Attempting a No-Huddle Offense? How’s That Working for You?
Digital Dealer - November 2017 - 7
Digital Dealer - November 2017 - 8
Digital Dealer - November 2017 - Is a Financial Partnership in Your Future?
Digital Dealer - November 2017 - 10
Digital Dealer - November 2017 - 11
Digital Dealer - November 2017 - 12
Digital Dealer - November 2017 - Fallacy
Digital Dealer - November 2017 - 14
Digital Dealer - November 2017 - 15
Digital Dealer - November 2017 - You Can't Take a Train 500 Miles on 400 Miles of Track
Digital Dealer - November 2017 - 17
Digital Dealer - November 2017 - 18
Digital Dealer - November 2017 - 19
Digital Dealer - November 2017 - 4 Tech Tools That Decrease Employee Turnover
Digital Dealer - November 2017 - 21
Digital Dealer - November 2017 - Organize for 2018 – Expect Greater Efficiencies and Profitability, Fewer Surprises
Digital Dealer - November 2017 - 23
Digital Dealer - November 2017 - 24
Digital Dealer - November 2017 - Retail Warranty Reimbursement: Leveling the Playing Field
Digital Dealer - November 2017 - Cracking the Car Code on Selling to the #1 Buyer: Women
Digital Dealer - November 2017 - 27
Digital Dealer - November 2017 - Professional Voice-Over Secrets!
Digital Dealer - November 2017 - 29
Digital Dealer - November 2017 - CAMERON JOHNSON Dealer Principal, Magic City Ford Lincoln
Digital Dealer - November 2017 - 31
Digital Dealer - November 2017 - 32
Digital Dealer - November 2017 - 33
Digital Dealer - November 2017 - 34
Digital Dealer - November 2017 - 35
Digital Dealer - November 2017 - When It Comes to Social Media... Don't Step on a Rake
Digital Dealer - November 2017 - 37
Digital Dealer - November 2017 - The Online Shopping Experience Has Radically Changed. Your Dealership Can Reap the Benefits.
Digital Dealer - November 2017 - 39
Digital Dealer - November 2017 - The New Car Manager's Modern Guide to Merchandising
Digital Dealer - November 2017 - 41
Digital Dealer - November 2017 - Top 3 Information Technology (IT) Recommendations for Stability and Increased Productivity at Your Dealership
Digital Dealer - November 2017 - 43
Digital Dealer - November 2017 - That’ll Bee $128 Forda Tech Ta Lookatit - Ouchie
Digital Dealer - November 2017 - 45
Digital Dealer - November 2017 - Only 5 ½ Cents- Per-Mile to Maintain a $50K Machine! Wow!
Digital Dealer - November 2017 - 47
Digital Dealer - November 2017 - 48
Digital Dealer - November 2017 - Cover3
Digital Dealer - November 2017 - Cover4
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