GCG’s Q1 2019 Automotive M&A Update provides an overview of the latest trends in the sector, including recent performance, valuation multiples and the state of the middle-market M&A environment.
Key findings include the following:
- Q1 experienced continued strength in the Automotive industry and the broader U.S. equity market as the market sentiment rebounded from a negative and volatile Q4 2018. However, on a trailing 3-year period ending March 31, 2019, the S&P 500 and DJI indices were up 36.7% and 45.7%, respectively. The Automotive industry has not recovered to the same extent as the broader market, with certain segments performing stronger than others. In the last 3 years, the industry has been led by the Dealers & Service Providers segment. North America-based OEM suppliers also have shown strength, unlike their foreign counterparts which have continued to under-perform since the segment’s peak in Q1 2018.
- Middle-market M&A activity remained strong in the Automotive sector with a significant increase in deal flow in Q1. While total value decreased from its high in Q4, Q1 2019 experienced year-over-year growth of 16.2%. Strategic buyers continue to drive and dominate overall deal activity.
- The Automotive Retail category led M&A activity, accounting for 63% of total Automotive transaction volume, which can be attributed to the ongoing consolidation among dealerships. Auto Parts & Equipment proved to be attractive targets as well with 25.2% of deal flow.
- Based on publicly traded companies representing the key sectors across the Automotive industry, public companies in the industry traded at an average multiple of 10.7x EBITDA. Among the four sectors, the strongest trading multiples observed were in the Dealers and Service Providers segment.
Click here for the full update.