Q1 Buy-Sell Deals Hot

First-quarter buy-sell activity reached record volume, according to Kerrigan Advisors’ Blue Sky Report, as more than 100 transactions closed encompassing 233 franchises that changed hands.

That number represents a 38% year-over-year jump, the sell-side adviser said, and came despite economic challenges, including high interest rates.

The activity is a record for first-quarter transactions, said Kerrigan, which estimates sales will surpass 400 for the year, or almost twice the prepandemic average and exceeding the record 397 set last year.

It attributes the surge in buy-sell dealmaking to the volume of owners putting their dealerships up for sale, making for a buyer’s market for the first time since the pandemic. That and the post-Covid fall in dealer profits are consequently lowering store values, even with earnings still exceeding 2019 levels by nearly 100%, Kerrigan said.

Nonetheless, it’s the dip in profits that’s moving many private dealers to put their stores up for sale in order to reap the return on the still-elevated valuations, says, Kerrigan, which debuted a Blue Sky Index to track dealership valuation changes, benchmarking it to Dec. 31, 2019. It said the new index is down 7% from the fourth quarter but 80% above 2019 levels.

Even with the valuation dip, the firm said top-performing import franchises in robust markets, particularly in Florida and Texas, are still commanding record valuations.

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