Significant Uptick in Dealership Profits Leads to More Acquisitions at Higher Values
FORT LAUDERDALE, Fla., March 23, 2021 /PRNewswire/ -- Haig Partners releases its Year End 2020 Haig Report, the leading industry quarterly report that tracks trends in auto retail and how they impact dealership values. It has been a year since the pandemic caused dealers to severely curtail operations in March of 2020. After a two-month lull, demand roared back and the average dealership generated 34% higher profits (excluding PPP) than in 2019, reaching the highest level on record. This rebound in profits resulted in an upshift in interest for acquiring dealerships from both private and public dealer groups.
"Last year was the best of times and the worst of times," commented Alan Haig, President of Haig Partners. "We went from the most severe economic contraction in our nation's history to a period when dealerships reached record profitability. Our nation mourns the vast personal losses that many suffered during the pandemic. Still, we are grateful dealers were able to maintain most of their staffs, keep them safe, and provide essential services to their customers," he continued.
As published in the Q4 2020 Haig Report released by Haig Partners, buy-sell activity in 2020 finished 15% higher than 2019, even though closings almost completely halted in April and May. We saw a spike in Q4 2020 when 104 dealerships change hands, a 33% increase as compared to 2019. The amount of spending by public companies exploded in 2020, reaching a total of $2.5B on domestic acquisitions, primarily attributable to Asbury and Lithia.
Key findings from the Q4 2020 Haig Report include:
- Dealership profits (excluding PPP) jumped 34.2% from 2019, reaching record-high levels
- Buy-Sell activity has surpassed pre-COVID levels
- Blue sky values rose 20% and are now at record high levels
- Public equity valuations are 107% higher than they were before the pandemic
- We expect these robust conditions to continue through the remainder of 2021.
The Haig Report, published quarterly, includes data and analysis on the performance of auto dealerships, discusses noteworthy events to the industry, identifies trends in the M&A market for dealerships, provides guidance on estimated value ranges for different franchises and shares an outlook for the M&A market. The Haig Report is based on data gathered from many reputable public sources, as well as interviews with leading dealer groups and dealers, bankers, lawyers, and accountants who specialize in auto retail.
Haig Partners LLC is a boutique investment banking firm and the leading buy-sell advisory firm to owners of higher value auto, heavy truck, and RV dealerships. Since 1996, the principals at Haig Partners have completed more than 275 dealership transactions for more than 515 dealerships totaling over $7.7 billion, more than any other team in the industry. For more information, visit www.haigpartners.com.
Contact: Aimee Allen, [email protected]
SOURCE Haig Partners LLC
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