Buy-sell transactions surged last year, sending dealership values higher, especially for luxury brands.
But that robust activity could slow and brand valuations could take a hit in the second half of this year due to an expected rise in interest rates then, said Erin Kerrigan, managing director of buy-sell advisory firm Kerrigan Advisors in Irvine, Calif.
There will be more megadeal activity in the first half as large private and public dealership groups continue to expand, fueled by banks that are eager to lend, Kerrigan said in her quarterly Blue Sky Report released today, March 16. Also feeding the buy-sell frenzy: more dealers choosing to sell rather than implement a succession plan, interest from outside investors and rising dealership real estate values.
But Kerrigan warned: "All of these trends will be affected in one way or another" by the expected rise in interest rates.