Kerrigan Advisors Represents Sunrise Auto Group in Sale of Two Memphis Dealerships to Lithia Motors

Rhea-AI Summary

Kerrigan Advisors facilitated the sale of Sunrise Auto Group's two leading Buick GMC and Chevrolet dealerships in Memphis to Lithia Motors (NYSE:LAD). This transaction highlights the robust buyer demand in high-growth, business-friendly Southern markets. With this sale, Kerrigan Advisors has successfully handled over 80 franchise sales in the Southeast since 2020. Sunrise Auto Group, led by Bob Berkheimer for 35 years, is a significant player in Memphis, capturing 75% of the city's Buick GMC sales. The Sunrise dealerships are top performers, with Wolfchase ranking #4 in Tennessee and Collierville #7. Buick GMC and Chevrolet have shown impressive sales growth in 2023. Tennessee's business-friendly environment and population growth have driven substantial interest from major auto retailers. Legal counsel for the seller was provided by Holland & Knight.

Positive

• Kerrigan Advisors completed the sale of two high-performing Buick GMC and Chevrolet dealerships.
• Sunrise Auto Group captures 75% of Memphis’ Buick GMC sales.
• Sunrise Wolfchase is ranked #4 Buick GMC dealership in Tennessee.
• Buick GMC and Chevrolet are top domestic brands with strong sales growth in 2023.
• Tennessee ranked #3 in America's Top States for Business by CNBC.
• The transaction adds to Lithia Motors' footprint in the attractive Tennessee market.

Negative

• Potential for shareholder dilution as Lithia Motors expands.
• Increased competition in the Southern auto retail market could affect margins.
• Transition risks as Sunrise Auto Group changes hands.

Insights

Financial Analyst

The acquisition of Sunrise Auto Group's top-performing Buick GMC and Chevrolet dealerships by Lithia Motors is a significant move in the automotive retail sector. This deal highlights the ongoing consolidation trend in the industry, where larger automotive groups are expanding their footprint through acquisitions. For Lithia Motors, this acquisition represents an opportunity to tap into the growing and business-friendly market of Tennessee, which has seen substantial population growth and strong buyer demand.

In the short term, this acquisition could boost Lithia Motors' revenue through increased sales volumes from these high-performing dealerships. In the long term, the strategic location in a high-growth area and the established customer base of Sunrise Auto Group can provide a steady stream of revenue. However, investors should be cautious about potential integration challenges and the need for significant capital expenditure to maintain and possibly upgrade dealership facilities.

For retail investors, it's essential to watch how Lithia Motors integrates these new assets and whether they can maintain the high standards set by Sunrise Auto Group. Additionally, evaluating Lithia Motors' overall strategy for future acquisitions and market expansion will provide insights into its long-term growth potential.

Market Research Analyst

The sale of Sunrise Auto Group to Lithia Motors underscores the attractiveness of the Southern U.S. market for automotive retailers. Tennessee’s favorable business environment, characterized by its right-to-work status and lack of state income tax, makes it an appealing destination for businesses seeking growth opportunities. This acquisition aligns with broader industry trends identified in Kerrigan Advisors’ 2023 Dealer Survey, which anticipates high franchise valuation growth expectations in the region.

For Lithia Motors, entering the Memphis market, the third-largest metro area in the Southeast, provides access to a robust trade and transportation sector. This strategic move can enhance Lithia’s market presence and leverage the high-growth potential in the Southern states. Retail investors should consider the implications of this acquisition on Lithia’s market positioning and its ability to capitalize on regional growth trends. The strong performance of domestic brands like Buick GMC and Chevrolet, noted for their sales growth in 2023, further reinforces the potential for sustained revenue growth from these newly acquired dealerships.

Sale of top volume Buick GMC and Chevrolet dealerships in Tennessee underscores the strong buyer demand in high-growth, business-friendly markets in the Southern region; transaction marks Kerrigan Advisors’ 273^rd dealership sale

MEMPHIS, Tenn.--(BUSINESS WIRE)-- Kerrigan Advisors, the premier sell-side advisor and thought partner to auto dealers nationwide, represented Memphis, Tennessee-based Sunrise Auto Group in the sale of Sunrise Wolfchase Buick GMC, the #1 Buick GMC dealership in Memphis, and Sunrise Buick GMC Collierville to Medford, Oregon-based Lithia Motors (NYSE:LAD). With the completion of this transaction, Kerrigan Advisors has represented on the sale of more than 80 franchises in the Southeast since 2020, and more than 65 franchises sold year-to-date.

Owner Bob Berkheimer started Sunrise Auto Group 35 years ago in Memphis, the third largest metro area in the Southeast and home to a flourishing trade and transportation sector. Sunrise is the largest Buick GMC dealer in Memphis, capturing over 75% of Memphis’ Buick GMC sales. Wolfchase is the #4 Buick GMC dealership in Tennessee, and Buick GMC Collierville is the #4 Buick GMC dealership in Memphis and #7 in Tennessee. Sunrise is a decorated General Motors dealer, having earned several Mark of Excellence and Dealer of the Year awards. In addition, Buick GMC and Chevrolet are top performing domestic brands, ranking high in sales growth in 2023 and in the Kerrigan Advisors 2023 Dealer Survey for franchise valuation growth expectations in 2024.

“Kerrigan Advisors was extremely honored to represent Bob’s legacy in Memphis through the strategic sale of these high performing General Motors franchises to Lithia Motors, a new market for the company,” said Gabe Robleto, Senior Vice President, Sell-Side Advisory at Kerrigan Advisors. “It was a pleasure to work with him on this sale and identify the perfect buyer in Lithia for these powerhouse dealerships in the very attractive Tennessee market.”

“First and foremost, I want to thank our employees and the Memphis community for their steadfast support and loyalty over the past few decades,” said Bob Berkheimer, President of Sunrise Auto Group. “As I contemplated this sale, it was critical to find the right buyer to continue our legacy here. I am confident that the dealerships, including my employees, will continue to see great success under Lithia’s ownership.”

Bob continued: “We knew that the buy/sell process would be complicated, and we wanted to get it right, so we hired the firm that was recommended as the best in the business – Kerrigan Advisors. And they more than lived up to their reputation, guiding us with care, expertise and acumen every step of the way, completing the transaction.”

Tennessee ranked #3 in America’s Top States for Business by CNBC, and Tennessee’s status as a business-friendly, right-to-work state, coupled with its absence of state income taxes, has driven substantial population growth. These attributes continue to drive strong buyer demand as described in Kerrigan’s 2023 Annual Blue Sky Report, which reports buyer demand for dealerships in the Southern states to be very high, particularly those markets with the highest population growth, strong franchise laws and business-friendly climates.

“The Southeast and, in this case, Tennessee, remains the go-to market for auto retailers, and we see most of the larger players in automotive retail seeking to expand their footprint in the South,” said Ryan Kerrigan, Managing Director of Kerrigan Advisors. “Given current data trends, we expect this to be the case for the foreseeable future, and we were proud to support Bob on this very successful transaction.”

Stephen Dietrich and Brooke Sizer of Holland & Knight served as legal counsel to the seller.

About Kerrigan Advisors

Kerrigan Advisors is the leading sell-side advisor and thought partner to auto dealers nationwide. Since its founding in 2014, the firm has led the industry with the sale of over 270 dealerships representing more than $8 billion in client proceeds, including the third largest transaction in auto retail history – the sale of Jim Koons Automotive Companies to Asbury Automotive Group. The firm advises the industry’s leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, Kerrigan Advisors does not take listings, rather they develop a customized sales approach for each client to achieve their personal and financial goals. In addition to the firm’s sell-side advisory services, Kerrigan Advisors also provides a suite of consulting and investor services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors’ signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments. To download a preview of the report, click here. The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail. To access The Kerrigan Index™, click here. To read the 2023 Kerrigan Dealer Survey, click here. To read the 2023 Kerrigan OEM Survey, click here. Kerrigan Advisors also is the co-author of NADA’s Guide to Buying and Selling a Dealership.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240611470857/en/

Kerrigan Advisors Media Contact:

Melanie Webber (melanie@mwebbcom.com)

mWEBB Communications

949-307-1723

Source: Kerrigan Advisors

FAQ

What did Kerrigan Advisors announce regarding the sale of Memphis dealerships?

Kerrigan Advisors announced the sale of Sunrise Auto Group’s top-performing Buick GMC and Chevrolet dealerships in Memphis to Lithia Motors (NYSE:LAD).

Which dealerships were sold by Sunrise Auto Group?

Sunrise Wolfchase Buick GMC and Sunrise Buick GMC Collierville were sold to Lithia Motors.

What is the significance of the Memphis dealerships' sale?

The sale highlights strong buyer demand in high-growth, business-friendly Southern markets.

How much market share does Sunrise Auto Group have in Memphis?

Sunrise Auto Group captures over 75% of Memphis’ Buick GMC sales.

What was the ranking of Sunrise Wolfchase dealership in Tennessee?

Sunrise Wolfchase is ranked #4 among Buick GMC dealerships in Tennessee.

How has the performance of Buick GMC and Chevrolet brands been in 2023?

Buick GMC and Chevrolet have shown strong sales growth in 2023.

What makes Tennessee an attractive market for auto retailers?

Tennessee's business-friendly environment, absence of state income taxes, and substantial population growth make it attractive for auto retailers.