But Ford said he could see SPACs — specifically ones attracted to dealership groups at the forefront of digital retailing and omnichannel efforts — playing a role in dealership consolidation. Omnichannel refers to digital shopping technology that seeks to provide a seamless buying experience for consumers, whether they shop online, in-store or both.
Ford said he expects dealership consolidation to intensify in the next few years to a pace similar to that during the late 1990s and early 2000s when the six public groups formed.
LMP Automotive Holdings Inc., a Fort Lauderdale, Fla., used-car retailer and vehicle-subscription provider that went public through a traditional initial public offering in late 2019, also aspires to roll up franchised dealerships. LMP hasn't closed franchised-store deals yet but has contracts to purchase eight dealerships in three states. It terminated other franchised deals, including an agreement to buy a 70 percent stake in Atlantic Automotive Group dealerships in New York.
Last month, auto retail veteran and entrepreneur Franklin McLarty took blank-check company MDH Acquisition Corp. public. His Southlake, Texas, firm is seeking businesses in what it described as the "heartland region" of the U.S. and in a variety of industries, including transportation and automotive. McLarty said that while his firm is open to automotive retail as a target sector, it likely isn't interested in traditional franchised dealerships.
But others are, and Louis Mannello, a partner in the advisory practice for accounting firm Dixon Hughes Goodman, which has worked with companies targeted by SPACs, said dealership owners are "thinking about it."
"There's been too much notoriety, too much success, frankly, money flowing in, for dealers to ignore it," Mannello said.
Jon Hansen, a partner in DHG's audit practice in Charlotte, N.C., said the used-vehicle companies that have gone public via a SPAC are showing a path for franchised dealerships. Hansen said DHG is talking with a few franchised clients about SPACs, but none is at the point of actively looking to pair with one of the companies.
SPACs typically must acquire or merge with a company within two years of going public or return the money they've raised. Many seek companies in growth mode.
Stuart McCallum, who leads the automotive consulting and accounting practice for accounting firm Withum of Princeton, N.J., said he's working with three auto retail clients that are targets of SPACs. He declined to share more, other than saying that one of the potential pairings could involve franchised dealerships.
Dealership lawyer Aaron Jacoby, managing director for law firm Arent Fox in Los Angeles, said he has two franchised clients interested in using a SPAC to roll up dealerships. Another dealership lawyer, Stephen Dietrich, a partner with Holland & Knight in Denver, said he's had a half-dozen or more franchised clients talk with him about SPACs since the fall, with two clients "really digging into it to see if it would make some sense."
Those two clients have had initial conversations with SPAC sponsors, Dietrich said, and something could happen this year.