A brake on or a break from acquisitions?
28 November 2016
Through the first six months of this year the level of acquisitions by large groups of smaller groups was significant. The deals just kept on coming and group statements kept pushing the growth through acquisition line.
However, in recent months takeover activity has been much quieter and almost non-existent.
At first I put this down to the Brexit vote being a turning point. Not in terms of the current economy and consumer spending, but in terms of business certainty and exchange rates.
In the past week Ive heard, from two different sources, that at least two take-overs were put on (possibly permanent) hold.
However, speaking to one senior retailer there is another factor to put into the mix. Those groups that have been on the acquisition trail of late are still being offered viable (and some less viable) businesses, but like the new car registration figures, its possible weve reached a peak for the price of an auto retail business. Apparently the deals are still being negotiated, its just that those doing the buying wont pay top dollar.
Backing up this theme is the SMMTs prediction of that next years new car market will be down 5% to 2.5 million in 2017 from the 2.7m expected this year. And unlike recent years where if you added up all the individual OEM targets for retailers youd get to something like 3.5m new cars, I hear that, with one or two exceptions, the average target figure is inline with the SMMT forecast.
So hopefully well see a few more acquisitions in the near future which, I think, will give the market a bit more confidence for 2017.
Auto Retail Network