Motor deals market – Review
6 September 2022
Whilst the motor sector ‘deals market’ has softened since earlier in the year when motor sector corporate finance accountants expected sector deal numbers to reach the highest levels seen during the past decade – we are still seeing good levels of deal activity in the sector. As in other sectors, there remains appetite from large international groups and private equity backed businesses attracted to buy quality UK businesses that are making good profits. Additionally, there is ongoing motor sector ‘consolidation’ generally, including with dealer groups looking to grow their representation for certain brand(s).
To what extent we continue to see major new entrants from (/owned by) outside the motor sector buying up dealer groups will also be interesting. Clearly, the relevant brand(s)/manufacturer(s) represented by the relevant dealer group to be acquired would need to be happy with the ‘fit’ and ongoing dynamic under the proposed new ownership – and that is not necessarily a given.
On pricing, clearly for most motor sector businesses FY 2021 was exceptionally good – and life in FY 2022 (and beyond) quite a bit more challenging – so for motor sector businesses looking to sell on FY 2021 numbers they are likely to have to discount their FY2021 profit/EBITDA figures to successfully transact.
As in any market though, the key fundamentals remain for sellers, including: make sure that you have a good second tier management in place (often the biggest barrier to successful sale in an owner managed business); get early sector specialist advice and prepare early – to increase both the likelihood of successful sale and the price you obtain!
For more information on the contents of this article, please contact Greg Allan Corporate Partner and Head of the Automotive Group.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at September 2022.