Driven largely by private buyers, U.S. dealership acquisition activity rose strongly during the first several months of 2014, dealership brokers say in two new reports.
In the first quarter, the total number of buy-sell deals jumped 60 percent to 48 transactions from 30, according to the Kerrigan Quarterly Blue Sky Report, which cited its own research and The Banks Report, an e-mail newsletter. Of those acquisitions, 40 were made by private dealership groups.
During the first five months of 2014, private acquisition announcements tripled to 42 transactions from 14, according to the Haig Partners Blue Sky Report, which cited Automotive News.
The increase in transactions reflects more sellers coming to market, said Erin Kerrigan, managing director of Kerrigan Advisors in Irvine, Calif.
“We attribute this to high blue sky prices, buyer demand for dealerships and a slowdown in dealership profit growth, meaning sellers are concerned about missing the market and want to ensure they exit on top,” Kerrigan said.
Alan Haig, president of Haig Partners in Fort Lauderdale, Fla., said if the level of deal activity seen in the first quarter continues, “we are likely to see one of the most active years for acquisitions in almost a decade.”
The public retailers also made first-quarter acquisitions, but the reports give different totals on their acquisition spending.
Haig Partners said public dealership groups, in their quarterly SEC filings, reported spending $155 million on U.S. acquisitions in the first quarter, up from $49 million in the year-earlier period.
The Kerrigan report said the publics spent $96 million on U.S. acquisitions in the first quarter of 2014, up from $88 million for the year-earlier period. Kerrigan uses the numbers filed in the retailers’ quarterly reports but adjusts them to remove inventory costs. Both reports estimated Group 1 Automotive Inc.’s domestic spending because the group didn’t separate U.S. and international acquisition costs in its quarterly filing.