As first reported by CBT News, Lithia Motors has acquired Michigan’s Suburban Collection. This transaction marks one of the largest dealership acquisitions in the past decade. Although details of the sale have not been disclosed, CBT News is providing insight from the deal with George Karolis, President of The Presidio Group, who advised The Suburban Collection on this sale.
Karolis begins the conversation by discussing what went into The Suburban Collection’s decision to sell their stores. Karolis says that Suburban CEO David Fischer made the decision to look for a strategic partner that could take Suburban to the next level. The deal was a perfect fit on both sides, as Lithia looks to continue expanding through the United States. Lithia will also keep the Suburban staff in place, which will allow them to make the transition quickly and move to their next acquisition.
Deals this large are a rarity across the industry. It takes a long period of time to work through the process of completing a large automotive transaction. Karolis says Presidio Group and Suburban have had a solid relationship for several years. The strength of their relationship provided Fischer and his team the trust they needed to allow Presidio to exclusively represent their dealership group during the acquisition.
Karolis then discusses motivating factors that lead dealers to sell their business. While Karolis can’t speak for Fischer and Suburban, he says that dealers often have their hand in other businesses that take up their time and energy. Karolis says that most dealers are influenced by the state of the automotive market when they decide to sell. Recently, new innovations in the industry have attracted investors and business people to consider entering retail automotive. With many new buyers, and large retail companies looking to expand, the current market provides many benefits for sellers.
Karolis concludes the conversation by discussing the most desired markets for dealers looking to expand. The two states that continue to see high levels of activity are Florida and Texas. Both states don’t have income tax and provide very strong markets. However, many dealers deal with sticker shock when they realize how expensive it is to complete acquisitions in those states. Due to the high demand, there is a premium price tag associated with most deals.