In today’s episode of Driving Solutions, we’re thrilled to have Erin Kerrigan, founder and managing director of Kerrigan Advisors, join us for an exclusive update on the booming buy-sell market. With an impressive track record and valuable insights into market trends, Kerrigan sheds light on what’s driving this record-breaking activity and how dealers can navigate these dynamic changes.
Key Takeaways
1. Kerrigan Advisors has had a stellar year, facilitating over $1.5 billion in transactions across more than 60 franchises. This surge highlights a very active buy-sell market, especially in high-growth regions such as Texas, Florida, and the Carolinas.
2. There is a noticeable trend of buyers becoming more selective, favoring high-growth markets and strong franchises. In contrast, dealerships in low-growth areas or with weaker franchises face greater difficulty in closing deals.
3. Current dealership valuations are based on recent earnings, reflecting a state of normalization that is still higher than pre-pandemic levels. Kerrigan notes that the market is adjusting to a new normal, with future earnings projections driving valuations.
4. Private dealers are increasingly seeking outside capital from family offices, equity partners, and even the bond market. This shift is moving the industry from a family-owned model to one supported by professionally managed capital.
5. OEM executives express skepticism about meeting EV sales goals and highlight high vehicle prices as a major hurdle. Additionally, there’s growing concern that OEMs may seek greater control over customer data and relationships in the future.
"Regarding your valuation, are your valuations based on what you have done for me lately? What is the business doing now? Because everything feels that we are in a state of normalization." — Erin Kerrigan
