The buy-sell market may not be as busy as the peak years of 2021 and 2022, but dealership valuations remain robust for any owner thinking about selling. Such is the demand for trusted advice in the buy-sell space that Haig Partners recently brought on board Jayson Crouch to add bench strength to Haig’s team of experts. In this recent conversation, Haig Partners President Alan Haig discussed the state of the buy-sell market with Crouch and his fellow managing director, Kevin Nill, and what they see as trends that potential participants in this market should consider, be they buyer or seller.
Q: What can you tell us about current conditions in the buy-sell market?
Alan Haig: The market is highly active, and valuations remain strong. As published in the Q3 2023 Haig Report®, we estimate a total of 355 dealerships have traded hands so far this year. That number of buy-sells is off the peak we saw in 2021 and 2022 but far higher than any year before the pandemic started. We are seeing declining profits in new vehicles, and that is causing blue-sky numbers to drop a bit – about 1% per month from the peak in 2022. But even at this lower level, valuations remain more than twice as high as a few years ago.
Q: You recently added Jayson Crouch to your team as managing director. If conditions are beginning to soften, why is Haig Partners choosing to expand?
Haig: We are always on the hunt for talented people who have an impressive history of providing financial services to auto dealers. Our team at Haig Partners has extensive experience in a variety of industries that we bring to bear when serving auto dealers. Our team has senior experience serving dealers while they were in investment banking, commercial banking and accounting. Three of us worked at AutoNation, then the largest auto retailer, leading the acquisition and divestiture of hundreds of dealerships.
Jayson’s background is a bull’s-eye in terms of what we were looking for. He has had senior positions with JPMorgan and Bank of America, perhaps the two biggest providers of capital to auto retailers. Plus, he spent over a decade at Toyota Financial Services. We like that DNA. While we are on track to have a record year at Haig Partners, we believe we could be helping many more dealers maximize the value of their businesses when they choose to exit. Jayson will be focusing on the western part of the U.S. to help expand our business there.
Q: Kevin Nill, you also left a senior position at Bank of America to join Haig Partners some time ago. What’s it like to sell dealerships instead of lending money to auto dealers?
Kevin Nill: It’s been an incredible and rewarding transition. Banking was a great training ground for me, enabling me to develop important skills and develop relationships with hundreds of dealers around the country. But money is a commodity, and to differentiate oneself, you need to bring critical intangible attributes to benefit the client. These include a client-driven focus, substantial business and financial acumen, and a breadth of experience negotiating and structuring transactions.
These skills transition well to advising dealers on selling their businesses, which is far from routine, and the quality of advice in our industry can vary widely. Each transaction is different, and dealers’ goals can vary. That means that as advisers, our team at Haig Partners has to be creative, flexible and relentless in advocating for our clients’ interests. We put together comprehensive offering materials that cause buyers to pay attention to our transaction instead of another one in the market. And we craft a unique marketing strategy for each client to optimize price and confidentiality.
When the right conditions align, we get to make history, such as selling Al Hendrickson Toyota for the highest price ever spent on a dealership. Advising the Hendrickson family was truly a joy for me, Alan and the rest of the team. The banking business is more stable than the buy-sell world, but assisting an owner with the sale of a business is far more exciting.
Q: Jayson, is there specific knowledge that you gained from the lending industry and Toyota that is beneficial to a dealer who is selling dealerships?
Jayson Crouch: Absolutely! Banking expertise offers an understanding of the intricacies of finance, risk assessment and valuation. I understand what is important to groups buying stores and how they were valuing dealerships. And since I was a senior executive at two of the largest financial institutions in the world, we knew we had to always act with the highest professional standards. I also understand how sellers should prepare to ensure buyers understand their business and how to relay this information to lenders to ensure transactions succeed. At Toyota, I partnered with some of the most valuable and best-operated dealerships in the country. Overseeing a six-state region and having inside knowledge of well over 100 dealerships in various markets provides a fast-track education on what works and what makes a dealership unique. Toyota is very focused on the dealer as customer and how to maximize customer loyalty. This mindset and the understanding of what drives the end-to-end dealership over time is extremely helpful in telling the seller’s story and aligning the right buyers who will see the value of the overall strategy. Finally, Toyota’s focus on continuous improvement is ingrained in my vision for success. We constantly questioned our processes and sought feedback to improve. I am bringing these skills with me to Haig Partners to ensure our clients receive the most favorable terms and valuations.
My journey in the automotive sector has always been about seeking excellence and aligning with entities that prioritize the same. Haig Partners represents the pinnacle of industry expertise in the buy-sell advisory space. What specifically drew me was the organization’s commitment to high professional standards, its unparalleled track record and the caliber of its team.