According to Kerrigan Advisors, the industry’s average blue-sky value — the intangible value of a dealership, including goodwill — reached a record $11.5 million per store in the quarter, passing the previous record of $11 million set in the fourth quarter of 2021 and up 35 percent from the first quarter of 2021, when it was $8.5 million.
“In the first quarter, we saw transaction activity rise, and we saw valuations rise, and we saw profits rise,” Erin Kerrigan, managing director at Kerrigan Advisors, told Automotive News. “So it was a trifecta of positive news. That being said, there are some economic concerns on the horizon that make us believe that while earnings will continue to rise this year, we do not think valuations will rise much higher than we’re seeing them today.”
Alan Haig, president of Haig Partners, pointed to what he described as troubling economic indicators such as high inflation and fuel prices, low consumer sentiment, rising interest rates and declines in the stock market.