Kerrigan Advisors' Blue Sky Report for the Third Quarter 2017 covering auto retail buy/sell market trends, dealership real estate and blue sky multiples.

1. Third Quarter 2017 November 2017
Contact Erin Kerrigan: (949) 439-6768 | erin@kerriganadvisors.com
Contact Ryan Kerrigan: (949) 728-8849 | ryan@kerriganadvisors.com
19700 Fairchild, Suite 150 Irvine, CA 92612 | (949) 202-2200 | www.kerriganadvisors.com
Securities offered through Bridge Capital Associates, Inc., Member FINRA, SIPC
THE
BLUE SKY REPORT
A KERRIGAN QUARTERLY
®

3. THE BLUE SKY REPORT® | 3
Kerrigan Advisors projects over 200 transactions will close in 2017, making this year one of the most
active dealership buy/sell markets on record. Historic mega deals with complex ownership structures
and multiple franchises are on the rise. These transactions are supported by a financial market that is
willing and able to invest hundreds of millions of dollars in auto retail, despite the doomsday headlines.
Investors and financial institutions see an opportunity to participate in a decades-long auto retail
consolidation game – one that they expect will produce winners and losers, particularly as technological
innovations potentially change the dealership business model as we know it.
Underlying today’s active buy/sell market is a very healthy U.S. economy. The unemployment rate hit a
17-year low of 4.1% in October, its lowest level since December 2000. GDP increased 2.3% through the
third quarter of the year and the stock market continues to set new highs, with the Dow Jones Industrial
Average up an impressive 18% for the year.
Public auto retailers are likewise seeing their stock prices increase, buoyed by the improving economy.
The Kerrigan IndexTM
is up 4.24% year to date and 608% from its 2008 recession lows.
DEALERSHIP ACQUISITION ACTIVITY
“I’m attracted to dramatic, massive change because I think the opportunity to make a difference
is great.”
Mike Jackson, Chairman and CEO, AutoNation
Third Quarter 2017 Earnings Call
“With the U.S. economy strengthening, retail sales should remain strong for the foreseeable future.”
Mustafa Mohatarem, Chief Economist, General Motors
Automotive News, October 9, 2017

4. THE BLUE SKY REPORT® | 4
0
100
200
300
400
500
600
700
800
2009 2010 2011 2012 2013 2014 2015 2016 2017
The Kerrigan Index™ S&P 500 (Rebased)
Chart I
The Kerrigan Auto Retail Index
January 2009 – October 2017
Source: SEC Filings and Kerrigan Advisors Analysis
The Kerrigan IndexTM
has outpaced the S&P
500 since 2009 by 512%. The Index is up
4.24% year to date and tracking back toward
2015 highs, up 38.8% from its 2016 low.
Even with these strong gains however, The Kerrigan IndexTM
is underperforming the broader market
(year-to-date, the S&P 500 is up 15.03%, compared to The Kerrigan IndexTM
which is up 4.24%). Auto
retail’s underperformance is in large part due to the industry’s sales stagnation. 2017 auto sales are
projected to decline by 3% from 2016, despite the support of record OEM incentive spending and
hurricane vehicle replacement. As interest rates rise (JP Morgan projects four Fed rate increases in
2018), auto sales will continue to feel downward pressure in 2018.
Methodology
The Kerrigan Auto Retail Index (The Kerrigan Index™) is composed of the seven publicly traded auto retail
companies with operations focused on the U.S. market, namely AutoNation, Penske, Lithia, Asbury, Group
1, Sonic and CarMax. The Kerrigan Index™ is weighted by the market capitalization of each company and
benchmarked at 100 on 1/3/2000.

5. THE BLUE SKY REPORT® | 5
-8 %
-6 %
-4 %
-2 %
0 %
2 %
4 %
6 %
14.5
15.0
15.5
16.0
16.5
17.0
17.5
18.0
18.5
19.0
Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17
SAAR YoY Change
-2% -1%
0%
-3%
-3% -2% -6%
-6%
+5%
+1%
Chart II
U.S. New Vehicle Monthly SAAR and Year-Over-Year Change
January – October 2017
Source: Automotive News
Despite record incen-
tive spending and a
boost from hurricane
replacement vehicles,
U.S. new vehicle sales
are on pace for a three
percent decline in 2017.
Dealership profits remain at historically high levels,
albeit 6.1% lower than 2015’s peak. Kerrigan
Advisors expects dealer profits to remain at these
high levels for the next several years, supported
by the growing U.S. economy and replacement
vehicle demand, driven by the aging U.S. fleet.
The growing U.S. economy is no doubt the bright spot for auto retail; however, as sales plateau
and dealership expenses grow, dealership profits are on the decline. Since the 2015 peak, average
dealership profits are down 6.1% (see Chart III below). Dealers find today’s auto retail environment
more challenging than the 2010-2015 period when profits grew annually at 15% on average. This being
said, 2017 is expected to be the third most profitable year in auto retail history. And, with the average
dealership remaining highly profitable, auto retail remains one of the most consistently profitable
business models in the U.S.
$668,917
$874,125
$1,138,307
$1,228,760
$1,283,609
$1,382,379
$1,503,432$1,466,799
$1,410,683
30.7% 30.2%
7.9%
4.5% 7.7% 8.8%
-2.4% -3.8%
-1 5 .0 %
5 .0 %
2 5 .0 %
4 5 .0 %
6 5 .0 %
8 5 .0 %
$ 0
$ 2 0 0 ,0 0 0
$ 4 0 0 ,0 0 0
$ 6 0 0 ,0 0 0
$ 8 0 0 ,0 0 0
$ 1 ,0 0 0 ,0 0 0
$ 1 ,2 0 0 ,0 0 0
$ 1 ,4 0 0 ,0 0 0
$ 1 ,6 0 0 ,0 0 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 LTM
Average Dealership Earnings YoY Change
Average Annual Increase +15.0% Average Annual Decrease -3.1%
Chart III
Average Dealership Earnings and Year-Over-Year
Change
2009 – 2017 LTM
Source: NADA

6. THE BLUE SKY REPORT® | 6
Against this backdrop, it is not surprising to see more sellers coming to market. While the value of their
blue sky is slightly lower than 2015’s peak, transaction values when including real estate, are at record
levels (see Chart XIV on page 14). Considering the potentially dramatic changes to auto retail on the
horizon, some dealers are concerned current valuations may not be replicable in the future and are
deciding this is their time to sell.
Interestingly, the increase in sellers coming to market has not significantly reduced sellers’ pricing
power. The buy/sell market remains competitive, particularly for top franchises and attractive platforms.
The growing population of buyers in the market, many of whom are supported by well-funded U.S. and
international investors, is creating a healthy market equilibrium – one where buyers and sellers agree
on price and complete win/win transactions. Kerrigan Advisors believes this equilibrium will continue
for the next several years and result in a highly active buy/sell market.
Our firm sees the following trends shaping the buy/sell market for the remainder of 2017 and through
2018:
ØØ The evolution of the dealership business model drives more sellers to market
ØØ Dealers are choosing to sell their real estate with their franchise
ØØ Captive finance companies play a critical role in acquisition financing
The Blue Sky Report®
is informed by Kerrigan Advisors’ experience representing our sell-side and
consulting clients in today’s buy/sell market, as well as research conducted by our firm. Kerrigan Advisors
is the most active, licensed sell-side advisor to auto dealers in the industry. Since 2015, we have advised
on the sale of 60 dealerships, including four of the Top 100 Dealership Groups in the U.S. Our firm works
exclusively for sellers of higher value dealerships and dealership groups. We provide both sell-side
advisory services and consulting services to assist our clients as they consider their strategic options for
their business.
We have had the pleasure of working with auto retail’s leading families in determining the right time to sell
and the most appropriate buyer for their dealerships. We do not take listings or maintain inventory, rather
we develop a customized, professional sales approach for each client to maximize transaction proceeds.
Our team personally oversees and manages our client’s sale process from the beginning to a successful
closing. In our view, dealerships are far too valuable to be sold any other way.
We hope you find the information presented in this quarter’s report helpful to your business. We look
forward to answering any questions you may have regarding The Blue Sky Report®
, The Kerrigan Index™
or Kerrigan Advisors’ sell-side and consulting services for auto dealers and their families.

7. THE BLUE SKY REPORT® | 7
THE
BLUE SKY REPORT
A KERRIGAN QUARTERLY
®
If you would like to read the full third quarter report,
please visit our website:
https://www.kerriganadvisors.com/theblueskyreport/

9. 19700 Fairchild Road Ste.150
Irvine, CA 92612
(949) 202-2200
www.kerriganadvisors.com
Kerrigan Advisors is focused on serving dealership sellers. We customize
our sale process to maximize our client’s transaction proceeds. The firm’s
leadership has advised on over $3 billion worth of transactions in auto
retail, private equity and investment banking. We leverage our proprietary
Buyer Database and extensive industry relationships to identify the right
buyer for our client’s business. Our sale process is highly professional,
actively managed, competitive, and — most important — discreet.
We Serve Sellers. We Know Buyers.
Erin Kerrigan is Managing Director of Kerrigan Advisors, which she founded in 2014.
Kerrigan Advisors is the leading sell-side advisor to auto dealers in the US. Since 2015,
the firm has sold over 59 dealerships, including four of the Top 100 Dealership Groups,
representing over $1 billion in client sales proceeds. Ms. Kerrigan started her career
in auto retail as dealer operator of her family’s dealership, which she sold in 2006.
She is a recognized industry expert on dealership buy/sells, valuation, real estate and
private equity, and is a frequent speaker at leading auto retail events and conferences
held by JD Power, NADA, American Institute of Certified Public Accountants (AICPA),
National Association of Dealer Counsel (NADC), and the Canadian Auto Dealers
Association. She has also been a key note speaker for events hosted by American
Honda Motor Company, Audi of America, Bank of America, US Trust, Texas Automobile
Dealer Association, Ohio Automobile Dealer Association, Colorado Automobile Dealer
Association, Wells Fargo and SunTrust Bank. Ms. Kerrigan earned her undergraduate
degree from Northwestern University and her MBA from The UCLA Anderson School of
Management. She resides in Newport Beach, California with her husband and partner,
Ryan Kerrigan, and their three children.
Contact Erin Kerrigan: (949) 439-6768 / erin@kerriganadvisors.com
Ryan Kerrigan is Managing Director of Kerrigan Advisors. Mr. Kerrigan oversees
strategy, finance and modeling for Kerrigan Advisors and leads the firm’s private
equity and family office advisory practice. He has extensive experience in private
equity investing, auto retail, management consulting and executive management.
In addition to his auto sector experience, he also served as Managing Director at
Serent Capital, a $250mm private equity fund investing in middle market companies
and as General Manager of his family’s auto dealership. Early in his career, Mr.
Kerrigan spent four years as a management consultant at McKinsey & Company,
where he advised Fortune 500 companies on growth strategies, organizational
issues, pricing and business valuation. Ryan has an MBA from Stanford Graduate
School of Business and an MSFS from Georgetown University’s School of Foreign
Service. He graduated summa cum laude from the University of Notre Dame with a
BBA in Finance.
Contact Ryan Kerrigan: (949) 728-8849 / ryan@kerriganadvisors.com
The Leading Sell-Side Advisor
to Auto Dealers
The Leading Sell-Side Advisor
to Auto Dealers