Erin Kerrigan Breaks Down the Revival of the Buy-Sell Market

At this point, several publicly traded automotive groups including Lithia Motors, AutoNation, and Asbury Automotive reported an increase in earnings per share for Q2. These earnings highlight the resilience of the auto retail industry and signal a strong return of transaction activity in the automotive buy-sell market. Erin Kerrigan, founder and managing director for the mergers and acquisitions firm Kerrigan Advisors, says that every transaction the firm was working on in the midst of the pandemic, has come back to life.

What surprises Erin the most is how quickly the buy-sell market has rebounded from COVID-19.

“As we are beginning to write our second-quarter report, which will cover the first full half of 2020, we believe that we may be above 2019 in levels when we finally finish tallying the buy-sell activity,” says Erin.

That is not unique to Kerrigan Advisors. Other companies are reporting similar findings when it comes to transactions. This is good news for dealers who are looking to sell today because valuations are strong and the buy-sell activity is alive and well. In fact, the Kerrigan Index is almost at its all-time high.

For example, despite a 33% decline in new vehicle sales in the second quarter, Lithia Motors, the third-largest dealership group in the U.S., posted record second-quarter earnings, including an impressive 4.4% pretax earnings to sales ratio, up over 40% from the second quarter of 2019. Lithia is not alone in its tremendous valuation increases in the capital market. When valuations are on the rise, buy-sell activity booms.

For more great insight from Erin Kerrigan, be sure to watch our entire interview above.