Buy-Sell Activity Continues to Surge

Some dealers “are ready to cash in on generations of hard work,” says Erin Kerrigan of Kerrigan Advisors

Jim Henry, Contributor

April 23, 2024

4 Min Read
Industry experts wonder if there’s a “new normal” in dealership profits.Getty Images

Fear of missing out – or FOMO, in text-message shorthand – is likely motivating some dealers to sell out this year while dealership values are still elevated.

“There could be an increase in sellers ready to cash in,” says Erin Kerrigan, founder and managing director of dealership buy-sell firm Kerrigan Advisors, Irvine, CA.

“They’re ready to cash in on generations of hard work, as they suspect the automotive retail game may be changing,” Kerrigan says during a recent webinar hosted by the American International Automobile Dealers Assn., Alexandria, VA.

Increased new-vehicle inventory, after supplies cratered in 2021 and 2022, is the biggest change in the market. Higher inventory means a return to more-normal dealership profits and a more-normal level of competition.

The big question that’s still unanswered is whether there’s a “new normal” – and at what level of profitability – or whether dealership profits will decline all the way back to pre-pandemic levels.

That’s according to recent dealership buy-sell reports on the fourth quarter of 2023 and full-year 2023 from Kerrigan Advisors and a couple of its competitors: Presidio Group, based in Denver and Atlanta, and Haig Partners, Fort Lauderdale, FL.

By all accounts, 2023 was a surprisingly active year in buy-sells, despite high interest rates that make it more expensive to borrow money for acquisitions, and the fact that in 2023, the six big, publicly traded new-vehicle retailers were less active in dealership M&A.

Kerrigan Advisors estimates there were 397 buy-sell transactions representing 680 rooftops in 2023, vs. 374 transactions and 645 rooftops in 2022.

Erin Kerrigan says 2023 saw a record number of transactions, even though the number of dealership rooftops sold was fewer than in 2021,  when a record 830 dealerships changed hands in 383 transactions, she says.

The three broker firms also expect another higher-than-average year for buy-sells in 2024.

“Our business today is actually more active than it was this time last year,” says George Karolis, Presidio Group president. “We expect the pace of buy-sells to continue – it’s just going to be different, as profitability is normalizing and things are getting a little tougher.”

As always, it can be difficult to bridge the gap between what sellers expect to make and what buyers are willing to pay, Karolis tells WardsAuto.

“Sellers have to be rational at all times,” he says of dealers. “The seller is wanting last year’s money. They have to see a different expectation. They’re still more valuable than pre-pandemic,” he says.

In 2023, dealership net pretax profit declined 20.4% vs. the previous year, based on a Presidio analysis of aggregated financial results of 4,000-plus U.S. franchised dealerships of all brands and sizes that work with NCM Associates. NCM, based in Kansas City, MO, is a provider for dealership 20 groups, which is generally a group of 20 non-competing dealerships who meet to confidentially discuss best practices, challenges and more. NCM also offers consulting and training.
Even with the decline, the average dealership’s net pretax profit in 2023 is still more than 2½ times what it was in 2018, before the pandemic, according to the latest Presidio-NCM Average

Dealership Performance Benchmark analysis.

More than two-thirds of the respondents to a separate, fourth-quarter Presidio Dealer Direction Survey fielded in January and February say they expect dealership profitability will decrease over the next 12 months. Respondents comprised 285 owners with a total of about 3,100 dealerships, Presidio says.

Meanwhile, Alan Haig, president and founder of Haig Partners, tells WardsAuto that while volume is declining in the buy-sell market, it’s movingat a lower rate than the fall in dealership profits.

The strong buy-sell market continues in part because dealers made so much money in 2021 and 2022, he says. They’re still flush with cash. That means less need to borrow to make an acquisition. And dealers know better than anyone else that dealerships still represent a good investment.

“We are seeing prices coming down because earnings are coming down,” Haig says. “People are not entering this industry cold. They have all this excess cash, and they don’t have any place to invest it that’s going to get a better return than a dealership.”

All three broker firms also stress that “normalization”  has less effect on dealerships that have always been the most desirable in terms of brand and location.

When new-vehicle inventory was short, the market created a “rising tide that lifts all boats,” Erin Kerrigan says, but that’s not so much the case anymore.

Dealerships are still highly sought-after in business-friendly, high-growth markets mostly in the South, such as Texas and Florida, she says. On average, luxury franchises are also holding onto high values, Kerrigan says.

“Today we are seeing more winners and losers in the buy-sell game, particularly in geography,” she says.

Presidio’s Karolis says, “Brands and geography matter much more than ever.”





About the Author(s)

Jim Henry


Jim Henry is a freelance writer and editor, a veteran reporter on the auto retail beat, with decades of experience writing for Automotive News, WardsAuto,, and others. He's an alumnus of the University of North Carolina - Chapel Hill, where he was a Morehead-Cain Scholar. 

Subscribe to a WardsAuto newsletter today!
Get the latest automotive news delivered daily or weekly. With 5 newsletters to choose from, each curated by our Editors, you can decide what matters to you most.

You May Also Like