Private Equity Funds and the Automotive Industry

I read with interest an article in Automotive News, June 8, 2015 edition titled “Where Are the Deals?”  Of particular interest were the following excerpts:

  • George Soros telling dealers at the NADA Convention that his family fund wanted to buy dealerships, but he has not found the right opportunity over the past 18 months;
  • the repeated reference to the Van Tuyl sale to Warren Buffet; 
  • maybe there is too much excitement about outside money (coming in) buying dealerships; and finally
  • people involved in private equity are some of the smartest people, and they are not going to overpay constantly.

The reality that private equity funds would not overspend on dealerships should not be surprising.  Private equity funds may have significant capital to invest, but they can be expected to invest wisely, often with the intent to turn profits on their equity investments more quickly than a traditional dealer might.  Our experience with institutional buyers in our market is that they are in no rush to overpay, even slightly.  We expect traditional acquisitions will continue to be the rule as opposed to the private equity buyer exception.

Likewise, it was interesting to read Erin Kerrigan’s comment in the same article, “Dealers haven’t worked for someone in many years, and they certainly don’t want to work for a private equity firm.” The definition of entrepreneur does not include a reference to “employee.”

Contact us with questions about investments in the industry and visit our blog for more of our articles.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2024 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Auto Industry Value and Economic Indicators
Automobile, Tax BY Steven Barber
Dealers Get an Extension for Time-of-Sale Reports for EVs
Automobile, Tax BY Steven Barber
Shocking! A Dealer Reporting EV Sales to the IRS is Confusing!
Automobile, Tax BY Brett Cubellis
Explaining the Transfer/Advance Payment of Clean Energy Credits and Energy Credits Online Registration
Automobile, Tax BY Steven Barber
How Did the IPIC Method Fare for Auto Dealerships Inventory in Year 2?
Dealership Transactions Are Bittersweet
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×