The dealership buy-sell market has undergone significant changes in a short period of time, as the retail automotive sector has grappled with unprecedented innovations and transformations. As the industry enters a new year, it is important to understand both how the mergers-and-acquisitions market has shifted and how it has remained the same.
On this episode of Driving Solutions, host Jim Fitzpatrick is joined by John Davis, managing director at Haig Partners. Haig Partners is one of the most sought-after dealership buy-sell advisories in the U.S. and has been involved in some of the biggest retail automotive M&A transactions over the last few years. Now, Davis shares his insights into how the market has changed for buyers and the crucial steps sellers should take in 2024.
Key Takeaways
1. Davis notes there are many reasons families may have for exiting the retail automotive sector. Some dealers who have been in the auto industry for decades may have descendants who are no longer interested in the family business. Others may be motivated by changes to the dealership buy-sell market and hope to take advantage of positive trends before they disappear.
2. Davis notes that, on average, dealership buy-sell valuations will begin to decline slightly in the coming months as revenues continue to fall from their pandemic-era peaks. However, he notes that store earnings are still very inflated and that some franchises or brands will actually see stronger pricing.
3. Working with a dealership buy-sell advisor is key to finding the best price possible for a storefront. Third parties with experience in retail automotive M&As can tell dealers whether they should implement certain changes or achieve specific benchmarks before selling or if they should take advantage of current conditions in the market and sell sooner rather than later.
4. Davis notes the current dealership buy-sell market is advantageous for both buyers and sellers. Sellers are facing high store prices and high demand, while buyers are facing a rare supply of stores in good locations that are also partnered with sought-after brands.
5. For the 2024 dealership buy-sell market, Davis urges retailers to consult with firms such as Haig Partners before making any sudden decisions. To learn more about Haig Partners’ advisory services, visit their website here.
"The real market value of a dealership is what a willing buyer will pay to a willing seller, and the marketplace will tell you that price eventually through negotiation." — John Davis | Haig Partners
