Erin Kerrigan discusses representing Keyes Automotive Group with its monumental sale to Lithia Motors

Lithia Motors is growing! They have now acquired nine Keyes Automotive Group dealerships, which is $1.4 billion in revenue for Lithia. This sale encompasses some of the highest volume auto dealerships in the U.S. and on today’s show we’re pleased to welcome Erin Kerrigan of Kerrigan Advisors, who represented Keyes Automotive Group in this transaction, to discuss one of the largest transactions in the automotive industry.

Kerrigan begins the conversation by discussing the latest transaction. She says the deal was quite sizable because Keyes operates some of the highest volume dealerships in the country. Kerrigan says that the average revenue per dealership for Keyes ranks number one in the country for private dealerships. Included in the deal was Keyes European, A Mercedes dealership ranking number two in the country in total sales volume. Along with Keyes European, the deal included three other dealerships that were all ranked in the top ten for their respected franchises. 

What goes into the decision of why dealers decide to sell? Kerrigan says that many dealers choose to sell because the industry is changing. In deals like this, timing is everything. When the industry began to recover it created a great opportunity for Keyes to sell and for Lithia to make the move to expand. Dealers also decide to sell based on high valuations for their dealerships.

Kerrigan then dives into the infamous question, “Is it a buyer’s market or a seller’s market?” She says that the current state of the market is equal between buyers and sellers. She says that dealers that are looking to sell are finding success, and new buyers are rapidly entering the market after seeing the success of retail automotive during the pandemic.

Kerrigan says that covering financial goals and identifying the right buyers to carry on a legacy is the most important aspect of any transaction. Most dealers are founded on a family dynamic, making decisions very personal for dealership groups. Sellers want to be confident that the buyer will take care of the employees and continue to strive for the values that made the dealership so successful.

Kerrigan then shares her thoughts on how the presidential race will impact the market. Even with the parties shifting in the White House, a divide in Congress could be key in delaying new tax plans. This gives buyers more confidence to jump into a transaction without fear of increased tax rates.

At the end of the conversation, Kerrigan encourages dealers looking to sell to really think about their strategy. In the past, dealers have just passed down their business from one generation to the next. However, with more changes coming to the industry, it’s certainly a good idea to look into strategic moves that will help dealerships grow to new heights.

Did you enjoy this interview with buy-sell expert Erin Kerrigan? Please share your thoughts, comments, or questions regarding this topic with host Jim Fitzpatrick at jfitzpatrick@cbtnews.com.