Buyers face record store values as dealership profitability has soared the last two years.
Haig Partners estimated that the blue sky value of a store owned by a public dealership group was $26.4 million in the first half, up 31 percent from the end of last year. However, that value dropped 9.8 percent to $23.8 million by the end of September, the firm estimated. Blue sky is the intangible value of a dealership, including goodwill.
Haig said dealership profits remain high, though they appear to have plateaued.
According to Kerrigan’s report, average blue sky value reached a record $12.1 million in the second quarter, passing the previous record of $11.5 million set in the first quarter and up 33 percent from the second quarter of 2021, when it was $9.1 million.
Haig, whose firm has been involved in the sale of 40 dealerships this year, said he expects transactions to finish the year at a heightened pace.
“We’re going to continue to see a lot of activity by private buyers,” Haig said. “They have more cash flow than they’ve ever had in their careers.”
Ganley is one of those private buyers who will remain active. He said his group has additional acquisitions in the works but is unsure whether they will close by year end.
“It’s certainly been a very hot market,” Ganley said. “We’ve been involved in a number of potential transactions that ultimately ended up selling to other buyers.”
Looking ahead, Ganley projects that 2023’s buy-sell market will be similar to 2022’s.
“Prices are high. Profits are high,” Ganley said. “Will it cool down a little? Maybe a little bit. But I don’t necessarily see [dealership sales] going back to pre-COVID numbers.”
Melissa Burden contributed to this report.