Digital Dealer - May 2019 - 8
D E A L E R OP S & M ANAGEM ENT: Bu y/Sel l M ar ket
By RYAN KERRIGAN
Managing Director,
Kerrigan Advisors
Buyers Pickier in
Today's Buy/Sell
Market
We are coming off yet
another great year of
high automotive retail
transaction volume, and the
good news is that deals
continue to get done in the
2019. From our vantage
point, 2019 will be another
strong year for buy/sell
activity. (See Chart 1)
That said, we observe
that buyers are getting much
more selective in the acquisition process. With SAAR
flattening and the economic
cycle showing some signs
of slowing, many buyers are
growing perceptibly more
cautious in their willingness
to underwrite deals. We
8
M AY 2 0 1 9
characterize this as a classic
"flight to quality" phenomenon that is common in late
market cycles. However,
it is worth noting that the
assumption that we are late
in the market cycle is exactly
that - an assumption. Only
time will tell just exactly
where 2019 lies in this eco-
DEALERSHIPS IN
GROWTH MARKETS
WITH GREAT BRANDS
HAVE A MORE
RESILIENT BUSINESS
MODEL AND ARE MORE
LIKELY TO SUSTAIN
PROFIT LEVELS
DURING AN ECONOMIC
DOWNTURN."
D I G I TA L D E A L E R . C O M
nomic cycle.
In these circumstances,
buyers fear overpaying for
earnings that are not sustainable, which quickly creates
a gap in buyer and seller
expectations. Sellers look at
current or trailing three-year
performance and take the
position that they should get
a fair multiple on earnings.
Buyers, on the other hand,
don't disagree in principle but
fear that tomorrow's earnings
will be down and are increasingly apprehensive to step up
to the plate on valuation.
This does not mean that
highly valuable dealerships
are being completely ignored.
Buyers recognize great
assets when they come to
market. Top brands and
strong locations, which infrequently become available,
are attracting good offers.
Certain buyers will purchase
exceptional assets regardless
of market conditions, knowing
that these franchises rarely
come to market. Moreover,
dealerships in growth markets with great brands have
a more resilient business
model and are more likely to
sustain profit levels during an
economic downturn.
In today's marketplace,
two types of dealerships are
particularly difficult to sell:
underperforming dealerships
and franchises tied to aggressive stair-step programs.
In a growing market,
buyers are willing to assume
risk by taking on an underperforming store and making
improvements to enhance
profitability and their return on
investment. However, in a flat
or declining market, buyers
are less confident in their
http://www.DIGITALDEALER.COM
Digital Dealer - May 2019
Table of Contents for the Digital Edition of Digital Dealer - May 2019
Digital Dealer - May 2019
Contents
A Message from the Show Director
Data Doesn’t Lie: Improve Your Fixed Ops Department and Yield Higher ROI for Your Dealership
Buyers Pickier in Today’s Buy/Sell Market
The Greatest Threat for Survival Could Be You
The Tales of a Parts Pro...
Developing a Revenue Center
Top 5 Reasons Dealers Need to Engage Their State Dealer Association
Interview with Doug Wilson
Broadcast Advertising Back to the Future!
Demystifying Digital Marketing: Using Metrics to Assess Effectiveness
10 Traits of an Extraordinary Social Media Manager
The Whole-Dealership Data Layer: The Time Has Come to Unify Your Data and Measure ROI
Digital Dealer 26 Rewind
Inspire Your Guest to Invest
The 4 Laws of Influential Conversations –Part 2
Million-Dollar Question: Can You Sell Cars?
Digital Dealer - May 2019 - Digital Dealer - May 2019
Digital Dealer - May 2019 - Cover2
Digital Dealer - May 2019 - 1
Digital Dealer - May 2019 - Contents
Digital Dealer - May 2019 - 3
Digital Dealer - May 2019 - A Message from the Show Director
Digital Dealer - May 2019 - 5
Digital Dealer - May 2019 - Data Doesn’t Lie: Improve Your Fixed Ops Department and Yield Higher ROI for Your Dealership
Digital Dealer - May 2019 - 7
Digital Dealer - May 2019 - Buyers Pickier in Today’s Buy/Sell Market
Digital Dealer - May 2019 - 9
Digital Dealer - May 2019 - 10
Digital Dealer - May 2019 - 11
Digital Dealer - May 2019 - The Greatest Threat for Survival Could Be You
Digital Dealer - May 2019 - 13
Digital Dealer - May 2019 - 14
Digital Dealer - May 2019 - 15
Digital Dealer - May 2019 - The Tales of a Parts Pro...
Digital Dealer - May 2019 - 17
Digital Dealer - May 2019 - Developing a Revenue Center
Digital Dealer - May 2019 - 19
Digital Dealer - May 2019 - Top 5 Reasons Dealers Need to Engage Their State Dealer Association
Digital Dealer - May 2019 - 21
Digital Dealer - May 2019 - Interview with Doug Wilson
Digital Dealer - May 2019 - 23
Digital Dealer - May 2019 - 24
Digital Dealer - May 2019 - 25
Digital Dealer - May 2019 - 26
Digital Dealer - May 2019 - 27
Digital Dealer - May 2019 - Broadcast Advertising Back to the Future!
Digital Dealer - May 2019 - 29
Digital Dealer - May 2019 - Demystifying Digital Marketing: Using Metrics to Assess Effectiveness
Digital Dealer - May 2019 - 31
Digital Dealer - May 2019 - 32
Digital Dealer - May 2019 - 10 Traits of an Extraordinary Social Media Manager
Digital Dealer - May 2019 - 34
Digital Dealer - May 2019 - 35
Digital Dealer - May 2019 - The Whole-Dealership Data Layer: The Time Has Come to Unify Your Data and Measure ROI
Digital Dealer - May 2019 - 37
Digital Dealer - May 2019 - Digital Dealer 26 Rewind
Digital Dealer - May 2019 - 39
Digital Dealer - May 2019 - 40
Digital Dealer - May 2019 - 41
Digital Dealer - May 2019 - Inspire Your Guest to Invest
Digital Dealer - May 2019 - 43
Digital Dealer - May 2019 - The 4 Laws of Influential Conversations –Part 2
Digital Dealer - May 2019 - 45
Digital Dealer - May 2019 - Million-Dollar Question: Can You Sell Cars?
Digital Dealer - May 2019 - 47
Digital Dealer - May 2019 - 48
Digital Dealer - May 2019 - Cover3
Digital Dealer - May 2019 - Cover4
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