The pace of agency consolidation continues to accelerate. Buy/sell expert offers a checklist agent principals can use to determine the market value of your business, weigh your options, and exit gracefully.
 - @GETTYIMAGES.COM/ marchmeena29

The pace of agency consolidation continues to accelerate. Buy/sell expert offers a checklist agent principals can use to determine the market value of your business, weigh your options, and exit gracefully.

@GETTYIMAGES.COM/ marchmeena29

M&A is top of mind for many in the industry, as F&I agencies are being acquired at a rapid pace. Over the past three years, at least 10 F&I agencies have been acquired by administrators, insurance agencies, and consolidators. These acquisitions are fueled by an influx of private equity capital and motivated by the need for acquirers to grow and lock in distribution channels. 


The rapid pace of agency consolidation is not expected to abate for the foreseeable future. The F&I industry is stronger than ever. In 2018, franchise vehicle sales, excluding certified pre-owned, were 29.8 million vehicles, a 14% increase over 2015, and we expect 2019 to be commensurate with last year. Average new vehicle sales prices are at an all-time record of $33,319 for Q1 2019, causing buyers to turn to the used-car market. 

Dealerships remain increasingly dependent on F&I income — it represents over a third of their profitability. These trends, coupled with the strong, predictable cash flow F&I agencies create have drawn private equity interest to the sector. The private equity universe is flush with cash with over $800 billion in the U.S. and Europe sitting on the sidelines waiting to be invested.


Challenging Competitive Dynamics for Small, Independent Agencies

The F&I agency universe is highly fragmented, with approximately 1,000 agencies in the U.S. with no single firm controlling more than an estimated 2% of the market. Agencies are typically local or regional players and few agencies of scale exist.