"For everybody that touches a deal, the bandwidth is limited," Mike Sims, president of Pinnacle Mergers & Acquisitions, a buy-sell firm in Frisco, Texas, told Automotive News. "It's hard to schedule appraisals. They're backed up. The day before closing, you'll do a parts inventory. Those guys are hard to schedule. Everybody is just booked up. Buy-sell attorneys are swamped."
It's all created a ripple effect that is slowing turnaround time on some transactions, Sims said.
Lawyer Joe Aboyoun of Aboyoun Dobbs in Pine Brook, N.J., said his firm's transaction volume is about double that of previous years.
"In terms of processing the deals, the manufacturers are overwhelmed," Aboyoun said.
He cited Honda as an example of one automaker experiencing delays.
"They said they are overwhelmed and they may not get to requests until late in the fourth quarter," Aboyoun said, adding he has clients wanting to close deals by the end of the year who require Honda's approval.
Honda did not respond to requests for comment. Mercedes-Benz declined to comment.
Stephen Dietrich, a Holland & Knight lawyer in Denver who works on buy-sell transactions, called the year-end rush "frenzied."
"It's probably as busy at the end of the year as I've seen it," he said.
With uncertainty still looming around what will happen to long-term capital gains tax rates, some dealers want to be sure to finalize deals in 2021, Dietrich said. Rate increases have been proposed by lawmakers, but it's unclear when or whether such a boost might be approved.
Dietrich said a couple of deals he is working on and had thought would close this year now likely will spill into 2022 because of the inability to get all approvals taken care of.
"I have seen more deals sort of slipping and sliding around just because you have to adjust and deal with the different timing issues," he said.
Dietrich and Aboyoun told Automotive News they were seeing dealers pay a premium to some vendors involved in buy-sells — such as environmental consultants who conduct needed reviews on real estate — to try to speed up the process.
J. Duncan Douglas, a principal for Partner Engineering and Science Inc., of Torrance, Calif., estimates his firm's automotive services revenue — which includes work such as dealership environmental site assessments and building inspections — has nearly tripled this year compared with 2020, itself a record year.