Coronavirus set-backs see an increasing number of car dealers looking to pack up and sell up for good

Time 1 year ago

An increasing number of car dealers are looking to sell up their businesses – resulting in opportunities for some of the well-funded, bigger dealer groups.

Speaking on Car Dealer Live, corporate finance partner at accountancy firm UHY Hacker Young David Kendrick said the economic fallout of Covid-19 had played its part in prompting some dealers to chuck in the towel.

He said the mergers and acquisition market was strong and had been pleasantly surprised by the amount of interest in transactions out there.


Kendrick said: ‘From some of the conversations we’ve been having, I think there’s a nervousness from people as to exactly where the market is going.

‘We’ve had the lockdown period, we’ve then had this pent-up demand that we’ve come back to and some really strong profitability.

‘But I do think there is an underlying nervousness within some of the smaller dealers as to how tough it might get. It’s going to be a good couple of years before this whole thing passes.

‘I think the reality is that this could be a challenging time for the economy for some while yet, and some of these businesses are asset-rich.

‘They’ve got a good freehold property for example, and that might make up the main element of a transaction value, so whether they get x times profits goodwill on top or not perhaps doesn’t make such a significant difference.’

Kendrick said he thought the M&A market might have been quiet following coronavirus but he’s been surprised at how busy he has been.

He added: ‘I think there could be some good opportunities for businesses who are looking to grow and have good cash reserves around them to bolt on strategic sites to their existing infrastructure.’


Kendrick explained how a business owner running a small franchise dealership could value their company, and although every scenario was different, factors included location, how much investment it had made in the latest spec, and how established it was all played a part.

He added that they were seeing some positive values in the market despite everything, with transactions that had been paused because of Covid-19 restarting or moving towards completion.

He added: ‘Discussions that we are having with some early-stage businesses that are dipping their toe in the market is that some of the well-established and well-positioned medium-sized privately owned groups are looking for strategic regional bolt-ons.

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‘They are prepared to pay half-sensible money for the right opportunity. So it’s not all doom and gloom.’

You can watch the interview in full by clicking on the video above.

You can see all of our Car Dealer Live interviews by clicking here

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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