2023 dealership buy-sell activity will stay busy

Starting in around 30 days, Sims said his firm has several closings stacked up.

Morgan Automotive Group of Tampa, Fla., already one of the largest dealership groups in the country and an active dealership buyer in 2022, is among those private groups with eyes set on growth.

CEO Brett Morgan told Automotive News it would “be realistic that we could have five or six acquisitions under our belt in Q1” and noted the acquisitions represent five or six dealerships total.

Auto retail giant Lithia Motors Inc., perhaps the most prolific dealership buyer the past few years, also signaled a continued stretch of acquisitions.

Lithia CEO Bryan DeBoer, speaking at AutoTeam America’s Dealer/CEO/CFO Forum Jan. 26, said his group will need to acquire 100 to 150 more dealerships in the U.S., and possibly elsewhere, by the end of 2025 to reach its goal of $50 billion in annual revenue that year.

Alan Haig, president of Haig Partners, a buy-sell firm in Fort Lauderdale, Fla., speaking at that event, estimated 533 dealerships were sold last year, but that 662 dealerships could trade hands per year through 2025 to help three of the public auto retailers reach increased revenue goals.

“The pipeline indicates that 2023 should be as good as 2022, just in terms of what we know so far,” Haig said of his business in an interview.

2021 is widely considered the busiest dealership acquisition year, with Automotive News tracking 382 buy-sell transactions involving 707 franchised stores trading hands.

Automotive News estimates that at least 376 transactions involving 568 dealerships took place in 2022, though that’s not a complete picture as four of the public dealership groups have yet to report year-end results, including possible deals that happened in the fourth quarter. The estimate is likely to grow before Automotive News reports final transaction numbers for last year. For January 2023, Automotive News estimates at least 22 transactions involving 37 dealerships took place. There were 16 transactions in January 2022 involving 23 dealerships, according to Automotive News‘ data.

Dave Cantin, CEO of Dave Cantin Group and DCG Acquisitions, who has a goal to close 50 dealership acquisitions this year, up from more than 30 in 2022, said he’s seeing interest not just from dealers, but from outside investors who want to buy dealership platforms of all sizes.

“And to hear that, and constantly hear that almost daily, is remarkable,” Cantin said. “It’s a sign for an incredible ’23 and possibly ’24.”

Erin Kerrigan, managing director of Kerrigan Advisors, a sell-side firm in Incline Village, Nev., said her company has a “significant number” of transactions already slated to close in 2023 and more in process. She said buyers have become choosier.

With “the expectation that there’s going to be a more challenging economy in ’23, we’re seeing buyers become a little more selective,” she said. “And so they’re really looking for the growth market, the top franchises.”

Matt McGovern, CEO of McGovern Automotive Group in Newton, Mass., bought nine dealerships in 2022 to grow to 24 franchised and used- vehicle dealerships. He has one acquisition under contract and is focusing on quality over quantity.

“I don’t need to run up to 35 or 50 stores for the sake of doing it,” McGovern said.