GCG’s Q3 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:
- The U.S. equity market maintained strong overall performance in Q3 2019. On a trailing 3-year period ending September 30, 2019, the S&P 500 and DJI indices were up 36.6% and 46.5%, respectively. The Automotive industry underperformed the broader market across all segments. The industry was led by the Dealers and Service Providers segment. North America-based OEM suppliers have also shown strength, unlike their foreign counterparts, which have continued to underperform since the segment’s peak in Q1 2018.
- In Q3 2019, middle-market M&A activity within the Automotive sector experienced year-over-year increases of approximately 13% and 40% in deal volume and value, respectively. The average deal value reached a high for the year of $73 million. Strategic buyers continue to drive overall deal activity, although financial buyers are gaining share and reached a high for the year, accounting for 12.6% of deal flow.
- Automotive Retail remains the most active sector, accounting for nearly 60% of total automotive transaction volume. Auto Parts and Equipment exhibited continued strength as well, however, the segment’s share of deal flow dipped from 32% in Q2 2019 to 17% in Q3.
- Select publicly traded companies representing the key sectors across the Automotive industry traded at an average multiple of 10.8x EBITDA and 1.3x revenue. Trading multiples varied significantly across and within the four categories with the strongest multiples observed in the Dealers and Service Providers segment.
Click here for the full update.