From mid-March through May, the dealership buy-sell market came essentially to a standstill. Over the past few weeks, we have seen an ever-increasing pace of transactions, whether these were picking up where things left off in March or were simply buyers exploring new deals. While most of us are trying to restore as much pre-COVID-19 normalcy to our lives as possible, I would exercise caution as it relates to valuations of dealerships.
There are plenty of influencing factors that are working to compel us to believe that the economic outlook of dealerships today is the same as it was in February, before the pandemic. We do not have to look further than the stock markets to see this school of thought play out. This also includes dealership brokers who are working hard to hold the line on the optimistic recovery of the economy and the perceived scarcity of available dealerships while justifying high valuations.