Digital Dealer - March 2018 - 16

By RYAN KERRIGAN
Managing Director,
Kerrigan Advisors

// Ownership

It Takes Two:
Who is Buying
All of These
Dealerships?
In prior columns in
this magazine, we
have discussed the robust
transaction market for
auto dealerships, a trend
that has now been in full
force for over five years.
To give you a sense of the
pace of change in our
industry, between 2014
and 2017, an estimated
1,080 dealerships sold, to
a total of 612 different
buyers! The transaction
statistics tell a story of the
big getting bigger as well,
with 28 different players
acquiring more than five
stores during this period,
and 10 players acquiring
more than 10 dealerships
during this four-year span.
Since 2011, the number of
private dealer groups with
greater than 10 dealerships has risen to 141, a
57% increase. (See Chart
1 and 2)
For many, it is intuitive as to who is selling,
given the thousands of
family dealership businesses, often extending
to the second, third, and
16

MARCH 2018

even fourth generations.
That said, I often get the
question: Who are all of
these buyers? It is a great
question because each
of these transactions
requires a seller, and a
buyer, to come to terms.
And, we are finding today's buyer pool to reflect
a more heterogeneous set
of acquirers versus prior
years.
Here, I will outline the
various types of buyers
that we are seeing active

in the current buy/sell
market.

LOCAL AND REGIONAL BUYERS. Consistent

with the past, there continue to be local and regional
dealership groups that
are opportunistically
seeking to get larger.
This has been true in
our industry for decades,
and continues to be true,
with an added imperative
for growth that many of
these businesses now
feel. Gaining size is now

seen as the antidote to
higher levels of fixed cost,
heightened compliance
requirements, complex
and expensive technology
platforms and the ability
to in-house sophisticated marketing and social
media resources. Many
of the local dealership
groups, viewed as the "big
boys" in their local markets, tell us that they need
to get even larger in order
to thrive in an ever-changing retail environment.
This is creating selling
opportunities for dealers,
and families, with single
stores or small regional
groups of stores.
SUPER REGIONALS.

Consolidation has now
created a new set of private dealership platforms
that have expanded
beyond local platforms,
and are now running dealerships groups in multiple
geographies. These are
privately funded companies with very deep auto

CHART 1

Number ofNumber
Dealership
Buyers
of Dealership
Buyers
2014 - 2017 Q3 YTD
2014 - 2017 Q3
18 10

Acquired 1 dealership

129

Acquired 2-4 dealerships
Acquired 5-10 dealerships
Acquired 10+ dealerships
455
Source: The Banks Report, Kerrigan Advisors Analysis

Acquired 1 dealership

dealerships
DAcquired
I G I T A L D E5-10
ALER
.COM

Acquired 2-4 dealerships
Acquired 10+ dealerships


http://www.DIGITALDEALER.COM

Table of Contents for the Digital Edition of Digital Dealer - March 2018

Digital Dealer - March 2018
Contents
What Are You Offended By Today, and What’s It Costing You?
How you Receive and Utilize Data in This Marketplace Determines Your Success
A Mystery Shop for a Major National OEM
It Takes Two: Who is Buying All of These Dealerships?
3 Fundamentals to Push Your New Vehicle Performance, Profitability
Mastering ‘Experiential’ Marketing!
Digital Dealer 24 Conference & Expo Speaker Highlights
Wes Lutz, Owner Extreme Chrysler- Dodge-Jeep-Ram
If You Are Losing Your Donkey – Check This
Big Data Busted 3: How Large Auto Groups Can Win With Better Data
From Self-Driving to Personal Robot: 5 Ways the Car of the Future Will Change Your Life
Facebook Betting Big on Auto: Tailored Solutions to Industry Challenges
Digital Dealer - March 2018 - CT1
Digital Dealer - March 2018 - CT2
Digital Dealer - March 2018 - Digital Dealer - March 2018
Digital Dealer - March 2018 - Cover2
Digital Dealer - March 2018 - Contents
Digital Dealer - March 2018 - 2
Digital Dealer - March 2018 - 3
Digital Dealer - March 2018 - 4
Digital Dealer - March 2018 - 5
Digital Dealer - March 2018 - What Are You Offended By Today, and What’s It Costing You?
Digital Dealer - March 2018 - 7
Digital Dealer - March 2018 - How you Receive and Utilize Data in This Marketplace Determines Your Success
Digital Dealer - March 2018 - 9
Digital Dealer - March 2018 - 10
Digital Dealer - March 2018 - 11
Digital Dealer - March 2018 - A Mystery Shop for a Major National OEM
Digital Dealer - March 2018 - 13
Digital Dealer - March 2018 - 14
Digital Dealer - March 2018 - 15
Digital Dealer - March 2018 - It Takes Two: Who is Buying All of These Dealerships?
Digital Dealer - March 2018 - 17
Digital Dealer - March 2018 - 18
Digital Dealer - March 2018 - 19
Digital Dealer - March 2018 - 20
Digital Dealer - March 2018 - 21
Digital Dealer - March 2018 - 3 Fundamentals to Push Your New Vehicle Performance, Profitability
Digital Dealer - March 2018 - 23
Digital Dealer - March 2018 - Mastering ‘Experiential’ Marketing!
Digital Dealer - March 2018 - 25
Digital Dealer - March 2018 - 26
Digital Dealer - March 2018 - 27
Digital Dealer - March 2018 - Digital Dealer 24 Conference & Expo Speaker Highlights
Digital Dealer - March 2018 - 29
Digital Dealer - March 2018 - 30
Digital Dealer - March 2018 - 31
Digital Dealer - March 2018 - 32
Digital Dealer - March 2018 - 33
Digital Dealer - March 2018 - Wes Lutz, Owner Extreme Chrysler- Dodge-Jeep-Ram
Digital Dealer - March 2018 - 35
Digital Dealer - March 2018 - 36
Digital Dealer - March 2018 - 37
Digital Dealer - March 2018 - 38
Digital Dealer - March 2018 - 39
Digital Dealer - March 2018 - If You Are Losing Your Donkey – Check This
Digital Dealer - March 2018 - 41
Digital Dealer - March 2018 - 42
Digital Dealer - March 2018 - 43
Digital Dealer - March 2018 - Big Data Busted 3: How Large Auto Groups Can Win With Better Data
Digital Dealer - March 2018 - 45
Digital Dealer - March 2018 - From Self-Driving to Personal Robot: 5 Ways the Car of the Future Will Change Your Life
Digital Dealer - March 2018 - 47
Digital Dealer - March 2018 - Facebook Betting Big on Auto: Tailored Solutions to Industry Challenges
Digital Dealer - March 2018 - Cover3
Digital Dealer - March 2018 - Cover4
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