Pub. 5 Issue 1

6 dealerships under contract at the highest end of KerriganAdvisors Blue SkyMultiple range. Contrary to some industry commentary, for quality franchises, we are not seeing a soft buy/sell market. As I have noted in prior Dealer Magazine articles, there has been a flight to quality in recent quarters, but that does not mean the market is weak. Buyers are very aware of the unusual length of this economic cycle and are thoughtful about their capital al- location. They are willing to step up for excellent opportunities, as defined by the intersection of brand, facility, location and performance. But they are shying away from some franchises, particularly those reliant on high-volume, new car gross, and stair-step programs. There have been a handful of recent national stories of finan- cial distress within the dealer body. In a highly fragmented in- dustry, there are always examples of entrepreneurs getting upside down. After 10 years of growth, historically low interest rates, and unique access to credit, it is not a surprise that some dealers have gotten overly indebted. In one case, a dealer had built an organi- zation with multiple lower quality brands, became overly reliant on one strong cash flowing store to fund the overall enterprise, and simply became overextended with facility and real estate debt. Other cases have been just bad business practices, includ- ing being out of trust and undercapitalized. However, in today’s environment, these are the exceptions, not the norm. To borrow an oft-used phrase, yesterday is history, and tomor- row is a mystery. Today is a gift and that’s why it’s called the pres- ent. This aptly sums up our situation in automotive retail today. It’s not perfect, it’s not ideal, and it never will be. The overall operating environment is positive and attractive deals continue to get done. We do not make predictions as to how long this cycle will run, but we recognize it for what it is – a good time to be in auto retail.  CONCERNED WITH THE COST, COMPLIANCE AND SERVICING OF YOUR DEALERSHIPS’ INSURANCE? EPIC CAN HELP WITH YOUR BENEFIT AND BUSINESS INSURANCE NEEDS • CNCDA's only licensed broker for Health and Business insurance • The largest insurer of auto dealers in the state • The only broker with proprietary products specific to dealerships • 15TH largest brokerage firm in the nation We know dealerships have specific needs and issues, we are here to help. Please contact us for a free evaluation of your insurance and HR/compliance packages. © EDGEWOOD PARTNERS INSURANCE CENTER | CA LICENSE 0B29370 EPICBROKERS.COM Alison McCallum 949.417.9136 alison.mccallum@epicbrokers.com Eric Kitei 949.417.9145 eric.kitei@epicbrokers.com  IS THE SKY FALLING — continued from page 4