M&A advisor for car dealership: 2026 Guide (Sell-Side + Buy-Side) | CT Acquisitions
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M&A advisor for car dealership: 2026 sell-side and buy-side guide

Updated Q3 2026 by CT Acquisitions.

M&A advisor for car dealership: 2026 sell-side and buy-side guide

Choosing an M&A advisor for car dealership transactions is the single decision that most often decides whether a rooftop trades at floor Blue Sky or premium Blue Sky, whether the OEM approves the buy-sell inside 60 days or forces a divestiture, and whether the real estate closes concurrently or hangs as a legacy sale-leaseback that clips the seller for a decade. Dealership M&A is unlike any other lower-middle-market vertical: state franchise laws in all 50 states give the OEM a hard veto, valuation runs on Blue Sky multiples of adjusted pretax earnings rather than straight EBITDA, and the buyer universe is dominated by six publicly traded consolidators that together deployed $4.4B in 2025. This guide is for the LMM dealership owner with $1M to $25M in adjusted pretax earnings who is considering an exit, and for the strategic acquirer or family office building a multi-rooftop platform. Everything below reflects Q1 through Q3 2026 market data from Kerrigan Advisors, Haig Partners, NADA and the public consolidator 10-Qs.

Key Takeaways

  • Public consolidators (Lithia, Asbury, AutoNation, Group 1, Penske, Sonic) deployed $4.4B on US dealership buy-sells in 2025, the second-highest annual spend on record per Kerrigan Advisors, with 458 buy-sell transactions covering roughly 700 franchises.
  • Blue Sky multiples on adjusted pretax earnings drive dealership valuation, not straight EBITDA: small domestic Buick-GMC transacts at 3.0x to 4.0x, volume import Toyota at ~7.5x, Kia at 4.5x to 5.5x, and luxury Porsche at 8.5x to 9.5x per Kerrigan/Haig Q4 2025.
  • Every buy-sell requires OEM franchise consent (typically 60 to 90 days) and a failed approval can force divestiture even post-close, as Asbury saw when it sold three South Carolina rooftops in February 2026.
  • Service absorption above 80% (versus national average 63.9%) and F&I PVR above the public-group average of $2,515 are the two operating KPIs that most consistently move dealership Blue Sky multiples upward.
  • Asbury acquired Herb Chambers Companies for $1.45B in July 2025 (33 dealerships, 52 franchises, 3 collision centers) after closing the $1.2B Jim Koons deal, showing that eight- and nine-figure single-family exits are still the platform-defining moves.
  • Q1 2025 US public-consolidator spend was $174M, a 91.1% year-over-year decline per Haig Partners, signaling that the buyer universe is capital-disciplined and only pays premium Blue Sky for premium franchise stores.
  • Private multi-store groups drove more than 90% of the 2025 deal count while public groups drove the dollar volume, meaning sell-side advisors must run parallel processes to both audiences to maximize price and certainty.
  • Working capital in a dealership includes floorplan-financed inventory ($20M to $200M+ per rooftop), parts inventory ($500K to $3M), holdback receivables and contracts-in-transit, all of which need dealer-specific normalization in quality-of-earnings work.
  • An experienced dealership M&A advisor sequences OEM consent, real estate diligence, floorplan lender transitions and DMV licensing in parallel; a generic broker treats them sequentially and adds three to six months to closing.

What does a car dealership M&A advisor actually do?

A car dealership M&A advisor runs the full sell-side or buy-side process end to end: normalizes adjusted pretax earnings to Blue Sky-ready form, prepares the confidential information memorandum (CIM) with franchise, real estate and floorplan detail, manages OEM approval in parallel with buyer diligence, negotiates the definitive agreements with the six public consolidators or the private multi-store groups, and coordinates DMV licensing and lender payoffs at close. Kerrigan Advisors and Haig Partners are the two most-cited specialists in the vertical.

The role is much broader than a business broker’s, and much narrower than a generalist middle-market investment bank’s. A specialized dealership M&A advisor spends the first thirty to sixty days on financial normalization, because the industry does not sell on straight EBITDA. Instead, valuations run on Blue Sky multiples of adjusted pretax earnings, and the normalization is the negotiation. Common adjustments include owner compensation, related-party rent above or below market, above-line packs (used-vehicle reconditioning charges above OEM-recommended), warranty labor rate uplifts that a new owner could obtain, F&I product back-book runoff and one-time OEM incentive payments.

The advisor then constructs the CIM and buyer list. On a franchise-store sale the buyer list is short and known: Lithia Motors, Asbury Automotive Group, AutoNation, Group 1 Automotive, Penske Automotive Group and Sonic Automotive on the public side, plus a smaller universe of private multi-store groups such as Ken Garff Automotive Group, West Herr Automotive Group, Morgan Auto Group (backed by GPB Capital successor entities), Hendrick Automotive Group, Napleton Automotive Group, Berkshire Hathaway Automotive (successor to Van Tuyl), and select family-office-backed regional platforms including those associated with Redwood Investments. See the Kerrigan Advisors Insights library for current buyer activity.

The next phase is OEM engagement. Every state franchise law in the US grants the manufacturer a right of first refusal and consent right on any buy-sell (see 50-state summary in NADA policy tracker). The advisor manages the OEM buy-sell package (buyer financial statements, dealer principal biographies, business plan, capitalization proof) and coordinates the consent process, which typically runs 60 to 90 days. Advisors then negotiate the asset purchase agreement, real estate purchase agreement or long-term lease, escrow for contingent liabilities, working-capital true-up, floorplan payoff mechanics, DMV license transfer, and post-close consulting or non-compete provisions.

Finally, the advisor coordinates closing: floorplan payoff, contracts-in-transit clearance, parts-and-accessory inventory count, service work-in-process reconciliation, employee transfer notices, and OEM warranty parts return. A specialist dealership advisor treats this as a project with fifty-plus critical-path items; a generic broker treats it as a punchlist and misses the sequence.

Why do car dealership owners need a specialized M&A advisor (not a generic broker)?

Dealership M&A has structural features that generic brokers do not know how to handle: OEM franchise consent, Blue Sky-not-EBITDA valuation, floorplan lender transitions, contracts-in-transit accounting, state DMV licensing, relevant market area (RMA) protest rights, and warranty parts obligations. A specialist advisor closes the OEM approval in parallel with financial diligence; a generalist runs them sequentially and adds six months. The dollar impact of that timing gap is measurable in half-turns of Blue Sky (a $10M to $25M swing on a mid-sized volume-import store).

Dealership valuation runs on Blue Sky multiples, and the multiple is franchise-specific. A Toyota point trades near 7.5x adjusted pretax earnings per Kerrigan Advisors and Haig Partners Q4 2025 agreement. A Porsche point trades in the 8.5x to 9.5x range per Haig Report Q4 2025. A domestic Buick-GMC single-point trades at 3.0x to 4.0x. A generalist broker who benchmarks a $6M pretax dealership at “7x EBITDA” or “5x EBITDA” without asking about the franchise brand, sales-to-service ratio, RMA protection and facility image compliance will either underprice a Porsche point by $10M+ or overprice a Buick-GMC point by $8M and blow the process.

Beyond valuation, the specialist knows the OEM’s private playbook. Toyota Motor Sales’ buy-sell process is different from Ford’s, which is different from Stellantis’s, which is different from Honda’s. Some OEMs use right of first refusal (Toyota has famously exercised this to swap store ownership). Some enforce facility image programs (Lexus L-Certified, Mercedes-Benz Autohaus, BMW Retail.Next) as a condition of consent. A specialist knows what facility upgrade commitment the OEM will demand from the buyer, factors that into the buyer’s total cost and therefore the price they will pay for goodwill.

Working capital and floorplan are the third specialist trap. Floorplan-financed new and used inventory sits on the balance sheet at $20M to $200M+ per rooftop and is subject to interest-rate volatility (Ally, Ford Motor Credit, GM Financial, Chase, TD Auto). The advisor negotiates whether the buyer assumes the floorplan, whether the buyer’s floorplan lender pays off the seller’s floorplan at close, and how contracts-in-transit (retail vehicle sales financed but not yet funded by the lender) are handled in the working-capital true-up. Get this wrong and the seller loses one to three percentage points of enterprise value in post-close adjustments.

In our experience advising car dealership owners, the single most valuable thing a specialist advisor delivers is the OEM relationship. On a recent volume-import single-point sale in a mid-Atlantic secondary market, we opened the OEM consent conversation before the CIM went out, presented the buyer shortlist to the manufacturer’s regional operations VP for informal soft-consent screening, and had a signed OEM consent letter in escrow at LOI signing. Total time from engagement to close: 137 days on an eight-figure Blue Sky. A generalist broker on the same store would have run financial diligence and OEM consent sequentially and pushed close past nine months, which invites floorplan interest, facility image upgrade demands, and a used-inventory market correction.

What EBITDA multiples are car dealership businesses selling for in 2026?

Dealership valuation runs on Blue Sky multiples of adjusted pretax earnings, not straight EBITDA. Per the Kerrigan Advisors Blue Sky Report and Haig Partners Q4 2025 report, small domestic single-points (Buick-GMC) trade at 3.0x to 4.0x Blue Sky, volume imports (Toyota) at ~7.5x, Kia at 4.5x to 5.5x, and luxury (Porsche) at 8.5x to 9.5x. Public comp EV/EBITDA averaged ~12.0x with a median of ~8.4x per Auxo Capital. Real estate, working capital and parts inventory are separate from the goodwill Blue Sky component.

Because Blue Sky multiples do not translate cleanly to a public comp EV/EBITDA number, dealership buyers underwrite in two steps: first apply the Blue Sky multiple to normalized pretax earnings to derive the goodwill value, then add tangible net assets (real estate at appraised value, parts inventory at OEM-recommended cost basis, fixed assets at depreciated cost, working capital at a normalized target). The sum is the enterprise value.

The Kerrigan/Haig agreement on franchise-specific multiples is the most useful sell-side benchmark, and the two firms typically publish agreed ranges quarterly. Where they diverge, the difference usually reflects deal-size mix (Haig tends to see more mid-sized dealer-group deals; Kerrigan advises on the largest transactions including Herb Chambers, Larry H. Miller and Jim Koons).

Franchise brand tier Representative franchise Blue Sky multiple range (Q4 2025) Adjusted pretax earnings context Source
Small domestic single-point Buick-GMC 3.0x to 4.0x Rural or secondary market, service-heavy, low new-vehicle share Kerrigan Blue Sky Report Q4 2025
Domestic core Ford, Chevrolet 3.5x to 5.0x Higher volume, F&I and truck mix drive premium; facility image spend material Haig Report Q4 2025
Mid-tier import Kia 4.5x to 5.5x Growing share, EV product cadence, franchise value climbing Kerrigan/Haig agreement Q4 2025
Volume import Toyota ~7.5x Rare on the market, RFR-active OEM, low inventory carrying risk Kerrigan/Haig agreement Q4 2025
Premium import Lexus, Mercedes-Benz, BMW 6.0x to 8.0x Facility image programs mandatory, F&I PVR premium, MB Autohaus / BMW Retail.Next capex Haig Report Q4 2025
Luxury exotic Porsche 8.5x to 9.5x Highest per-rooftop pretax, service absorption often 100%+, waitlist product Haig Report Q4 2025
Public-comp EV/EBITDA Lithia, Asbury, AutoNation, Group 1, Penske, Sonic (blended) ~12.0x avg / ~8.4x median Not directly comparable to single-point Blue Sky, but relevant for platform trades Auxo Capital public-comp research

Note that these ranges apply to healthy stores with positive adjusted pretax earnings, current facility image compliance, and a stable dealer principal. Distressed or turnaround stores trade at floor Blue Sky or asset-value plus goodwill of zero to two months of pretax. Underperformers with a strong franchise (a Toyota point running below twenty-group average) can still command mid-range Blue Sky because a strategic acquirer can bring gross-profit uplift within twelve months of close.

Which PE platforms are actively acquiring car dealership businesses right now?

Franchise dealerships are structurally hard for private equity because state franchise laws give the OEM veto over ownership, and most OEMs will not approve a sponsor-controlled operator with a defined hold period. As a result, the buyer universe is dominated by six publicly traded consolidators (Lithia, Asbury, AutoNation, Group 1, Penske, Sonic) plus private multi-store groups. PE participation is largely through minority stakes in private dealer groups, with Redwood Investments and select family offices backing regional platforms.

This is the single most important structural fact for a dealership seller to understand. In most LMM verticals a sell-side advisor would run a parallel process to fifteen to twenty-five sponsors and expect three to seven IOIs. In dealership M&A the sponsor process is a fallback, not the main event. The mainline buyer set is:

Acquirer / platform Sponsor or public parent Recent activity Typical dealership profile targeted
Lithia Motors (LAD) NYSE-listed public consolidator 11 US acquisitions in 2025 adding $1.16B annualized revenue per company press releases and Kerrigan tracking Rural and secondary-market franchise groups, all brand tiers, driver of “Driveway” digital retail platform
Asbury Automotive Group (ABG) NYSE-listed public consolidator $1.45B Herb Chambers Companies deal July 2025 (33 dealerships, 52 franchises, 3 collision centers), $1.2B Jim Koons acquisition, three SC dealerships divested Feb 2026 Premium markets, luxury-heavy portfolios, F&I platform (Total Care Auto)
AutoNation (AN) NYSE-listed public consolidator Mazda and Ford dealerships in Colorado Q1 2025 per company disclosures Metro coverage, brand consolidation, AutoNation USA used-vehicle expansion
Group 1 Automotive (GPI) NYSE-listed public consolidator US and UK strategic buyer, active in Texas, Northeast and UK premium Premium and luxury franchise concentrations in top-100 MSAs and UK
Penske Automotive Group (PAG) NYSE-listed public, Roger Penske chairman Luxury-heavy, active in US, UK, Italy, Germany; commercial truck focus (Penske Truck Leasing sibling) Premium luxury, Porsche, Ferrari, Rolls-Royce, Bentley franchise groups
Sonic Automotive (SAH) NYSE-listed public consolidator EchoPark used-vehicle standalones and franchise consolidation; Sonic Automotive Charlotte HQ Franchise groups plus used-vehicle standalone acquisitions
Ken Garff Automotive Group Private, family-owned (Utah HQ) Multi-state private group, 60+ dealerships, active acquirer in western and mountain states Domestic and volume-import franchise stores in growth MSAs
Berkshire Hathaway Automotive (BHA) Subsidiary of Berkshire Hathaway (successor to Van Tuyl Group) Private multi-store group, ~80 dealerships, indefinite hold consistent with Berkshire model Broad franchise mix in Sun Belt and Texas markets
Redwood Investments and select family offices Private capital backers of regional dealership groups Minority-stake structures compatible with OEM consent regimes Regional multi-rooftop platforms, growth via bolt-ons under franchise-experienced principals

Notice what is missing from the buyer list: named pure-play private equity funds. A conventional PE sponsor with a five-year hold and IRR-driven exit is difficult to fit inside OEM consent regimes that require an operating dealer principal with committed capital and long-tenure intent. Sponsors do participate, but almost always as minority capital behind an experienced operator, which is why family offices (Redwood, plus a number of single-family offices that do not publicize positions) are the dominant “sponsor” flavor in the vertical.

Who are the strategic acquirers in car dealership M&A?

The six publicly traded consolidators (Lithia Motors, Asbury Automotive, AutoNation, Group 1 Automotive, Penske Automotive, Sonic Automotive) plus large private groups like Ken Garff, Hendrick Automotive Group, Berkshire Hathaway Automotive, West Herr, Morgan Auto Group, and Napleton drive the strategic buyer universe. Public consolidators deployed $4.4B in 2025 buy-sells across roughly 700 franchises per Kerrigan Advisors, while private groups drove more than 90% of the deal count.

The strategic buyer picture in car dealership M&A has a clean dichotomy. Public consolidators dominate dollar volume and pay premium Blue Sky on premium franchises in top-100 MSAs. Private multi-store groups dominate deal count and are more likely to buy secondary-market stores, distressed situations, and single-points that public consolidators would deem too small for their platform.

The Herb Chambers Companies transaction is the reference platform trade. Asbury Automotive Group paid $1.45B in July 2025 for 33 dealerships, 52 franchises and 3 collision centers, the largest single-family dealership exit on record per Kerrigan Advisors, who advised on the transaction. The deal illustrates several strategic-buyer patterns: premium-market concentration (New England luxury including Mercedes-Benz, BMW, Lexus, Audi, Land Rover, Porsche), significant real-estate component, F&I platform integration (Total Care Auto), and a subsequent OEM-driven divestiture of three South Carolina rooftops in February 2026 that shows even completed deals can be reshaped by OEM approval outcomes.

On the private-group side, family-owned platforms like Hendrick Automotive Group (Rick Hendrick’s Charlotte-based platform), Ken Garff Automotive Group, West Herr Automotive Group (Buffalo NY), Morgan Auto Group, Napleton Automotive Group, and Berkshire Hathaway Automotive have an indefinite hold and can price stores on strategic fit rather than IRR. They typically compete with public consolidators on secondary-market stores where the public groups’ logistics footprint is less efficient.

What buyer archetypes are most active in car dealership?

Four buyer archetypes dominate: (1) public consolidators (Lithia, Asbury, AutoNation, Group 1, Penske, Sonic) buying platform and top-decile single-points; (2) private multi-store growth groups (Ken Garff, Hendrick, West Herr, Morgan, Napleton) building regional density; (3) family offices and Berkshire-style holders backing operator-led platforms with indefinite hold; and (4) individual operator buyers, often existing dealership principals expanding within the same OEM. Each has different diligence style, deal structure preferences, and OEM approval risk. See CT Acquisitions buy-side archetype for strategic acquirers.

For the sell-side advisor, the practical implication is that the buyer list must be segmented by archetype and each segment approached differently. Public consolidators receive a full CIM with public-comp positioning and want board-ready analysis (they present material to committees on a monthly cadence). Private multi-store groups want operator-to-operator conversations early and will move faster if approached principal-to-principal.

Family-office-backed platforms and Berkshire-style holders want indefinite-hold language and often prefer minority-stake or earn-in structures that preserve the operator’s continued involvement. Individual operator buyers (a $30M pretax dealer principal buying a similar-sized adjacent store) usually need seller financing, an OEM-blessed dealer development track, and a longer diligence window because they are not staffed for institutional M&A.

What car dealership-specific value drivers increase the sale multiple?

Franchise brand strength (Toyota, Lexus, Porsche premium; domestic economy discounts), F&I PVR above the public-group average of $2,515, service absorption above 80% (versus national 63.9%), real estate ownership at the dealership site, market exclusivity via RMA protection, general manager tenure of five-plus years, floorplan lender relationship depth (Ally, Ford Credit, GM Financial), and sales-to-service ratio all move dealership Blue Sky multiples upward. Facility image compliance under OEM programs (Lexus L-Certified, MB Autohaus, BMW Retail.Next) is table stakes.

Value driver Benchmark or premium threshold Typical Blue Sky impact Underwriting evidence buyers request
Franchise brand tier Toyota / Lexus / Porsche = premium; Kia mid; Buick-GMC discount Range of 3.0x to 9.5x Blue Sky per franchise tier Twenty-group data, OEM franchise agreement, RMA map
F&I gross per vehicle retailed (PVR) >$2,515 public-group Q2 2025 average +0.25x to +0.75x on a store with 12-month sustained outperformance DMS report, F&I product mix, chargeback history, twenty-group benchmark
Service absorption >80% (NADA top decile); national avg 63.9% in 2025 per NADA +0.5x on stores at 90%+ Fixed operations P&L, RO count, effective labor rate, warranty vs customer-pay mix
Real estate ownership at site Owner-occupied vs long-term lease +$500K to $5M+ in tangible value; simplifies close Deed, environmental Phase I/II, ADA compliance, facility image capex history
Market exclusivity (RMA) Exclusive RMA with no OEM open-point plans +0.5x on markets with pending competitor open-points OEM market study, competitor point letters, RMA protest history
General manager tenure 5+ years with buyer-acceptable retention package +0.25x on stores where GM stays 24+ months post-close Employment agreement, comp history, retention plan proposal
Floorplan lender relationship depth Long-term Ally, Ford Credit, GM Financial, Chase or TD Auto Frictionless close; buyer’s floorplan lender assumes cleanly Floorplan history, curtailment record, aged-inventory report
Sales-to-service ratio 1:1 or better (units sold : ROs) +0.25x on stores with balanced fixed-ops density DMS RO count, service loyalty, in-warranty capture rate
Facility image compliance Current under OEM program (MB Autohaus, BMW Retail.Next, Lexus L-Certified, etc.) Table stakes; noncompliance drops Blue Sky 0.5x to 1.5x OEM facility status letter, capex history, prospective upgrade requirements
CSI and OEM customer-experience score Top-quartile of region for sales and service +0.25x, plus preserved OEM incentive tiers OEM CSI dashboard, twenty-group ranking, customer complaint history

Note the direction of causation: high F&I PVR and high service absorption do not just increase the multiple, they also raise the earnings base to which the multiple is applied. A store that adds $500 to its F&I PVR across 1,500 units retailed adds $750K to pretax earnings, which at a 7.5x Toyota Blue Sky adds $5.6M to enterprise value. Buyers understand this compounding effect, and a sophisticated advisor will present twelve-month rolling KPI improvement alongside the historical run-rate to argue for pricing on run-rate-plus-uplift rather than trailing twelve months.

What operational KPIs do car dealership buyers underwrite?

Buyers underwrite F&I gross per vehicle retailed (public group average $2,515 Q2 2025, up ~14% in 2025), new vehicle gross PVR (~$5,000 in 2023), used gross PVR, service absorption (NADA target 75%, top-decile 80%+, national avg 63.9% in 2025), service RO gross ($218 average 2025 per NADA, +5% YoY), CSI scores, used-to-new sales ratio, and days supply of new and used inventory. Each is benchmarked against the OEM’s twenty-group data for the specific franchise.

The twenty-group is the reference dataset in dealership M&A. Every OEM sponsors dealer twenty-groups (twenty non-competing dealers meeting quarterly to share operating benchmarks under NCM Associates or DHG facilitation), and the twenty-group composite is what buyers benchmark against. A store performing at composite average is a fair-Blue-Sky target; a store performing at top-quartile of composite is a premium-Blue-Sky target; a store performing below composite average is a discount-Blue-Sky target unless the buyer sees identifiable turnaround levers.

Concretely, the ten most-underwritten KPIs are:

See NADA’s 2025 Annual Financial Profile of America’s New-Car Dealerships for full-year benchmarks and franchise-tier detail.

What financial metrics matter most in car dealership M&A?

The four financial metrics that drive dealership pricing are adjusted pretax earnings (the base for Blue Sky), tangible book value (real estate plus parts plus fixed assets plus normalized working capital), floorplan financing balance and terms, and adjusted EBITDA for public-comp cross-check. Buyers will not price a store on straight EBITDA alone because floorplan interest treatment, related-party rent, and above-line packs distort comparability. Quality of earnings work should reconcile pretax to Blue Sky and to EBITDA in one worksheet.

The adjusted pretax normalization sequence typically includes: owner and family compensation added back to fair-market GM comp, above-market or below-market related-party rent normalized to fair-market rent, above-line packs (used-vehicle reconditioning charges that inflate front-end gross) removed, warranty labor rate normalized to OEM-recommended, F&I product back-book runoff treated as one-time, one-time OEM incentive true-ups excluded, floorplan interest treated per accounting policy (some advisors present pretax pre-floorplan, some post-floorplan), and legal/consulting fees related to the transaction added back.

The tangible book component is often understated by sellers because they think of the business as the operating goodwill. In practice, the real estate can be 30% to 60% of enterprise value on a smaller store. Parts inventory at OEM-recommended cost basis is $500K to $3M. Fixed assets (lifts, alignment racks, tire mounting, paint booth in body shop) are depreciated but replacement-cost material. Working capital targets are franchise-specific: Toyota and Honda points run leaner; luxury stores run larger due to higher unit inventory carry.

Floorplan financing balance at close is either paid off by the buyer’s lender or assumed. The mechanics matter because floorplan interest is a real expense (typically LIBOR/SOFR + 1.5% to 2.5%) and the credit terms drive the store’s cash conversion cycle. Buyers underwriting a store with a stretched floorplan curtailment history (aged inventory not paid down on schedule) will discount for the working-capital cleanup required post-close.

How is quality of earnings (QoE) different for car dealership businesses?

Dealership QoE is materially different from generic LMM QoE because of contracts-in-transit accounting, floorplan interest treatment, warranty and service contract deferrals, holdback and volume-incentive receivables, above-line packs, and manufacturer-directed advertising credits. A generalist accounting firm will produce a QoE that public consolidators reject. Specialist QoE providers include Withum, Crowe, RSM and BDO’s dealership groups. Every finding should be tied to a normalization adjustment on adjusted pretax earnings, not on straight EBITDA. See CT Acquisitions quality of earnings guide.

The most consequential dealership-specific QoE topics are:

What working capital and CapEx nuances affect car dealership valuations?

Floorplan-financed new and used inventory is dealer-carried at $20M to $200M+ per rooftop and dominates the current-asset side of the balance sheet. Real estate is a $5M to $50M asset per site. OEM-mandated facility image upgrades run cyclically at $1M to $10M and are often required as a condition of buy-sell consent. Parts inventory is $500K to $3M. Manufacturer holdback and volume-incentive receivables are lumpy. Working-capital targets in a purchase agreement should be franchise-specific and reconciled to a trailing twelve-month average, not a point-in-time snapshot.

Real estate is the biggest single working-capital / CapEx conversation. Public consolidators would often prefer to acquire the dirt (Lithia and Asbury both own significant real estate portfolios) but will accept a long-term triple-net lease at fair-market rent. Sellers considering a real-estate carveout should have an appraisal in hand before going to market so the goodwill / real-estate split is credible to buyers.

Facility image capex is the sneaky killer. OEMs cycle facility image programs on approximately five- to seven-year cadences (BMW Retail.Next, MB Autohaus 3.0, Lexus L-Certified, Audi Terminal). A buy-sell frequently triggers an image-upgrade commitment as a condition of OEM consent. Sellers with a store that is due for a $3M to $8M image upgrade in the next 24 months should either front the upgrade themselves and get credit in the price, or negotiate a buyer credit for known future capex.

Floorplan mechanics deserve their own subsection. The floorplan lender (Ally, Ford Motor Credit Company, GM Financial, Chase Auto Finance, TD Auto Finance, or captive banks for luxury brands) pays the manufacturer at wholesale delivery, and the dealer curtails the balance as vehicles sell. In a buy-sell the buyer’s floorplan lender typically pays off the seller’s floorplan at close. The advisor coordinates floorplan payoff letters, curtailment schedules, and any aged-inventory writedowns.

What regulatory or licensing issues affect car dealership M&A?

State franchise laws in all 50 states require OEM consent for buy-sells (typically 60 to 90 days). “Good cause” termination protections (for example New York VAT Section 463 requires 90-day notice and 180-day cure) constrain OEM behavior. The federal Automobile Dealers’ Day in Court Act 1956 (ADDCA) enables a federal claim against bad-faith OEM termination. State direct-sales bans continue to be litigated (Tesla, Rivian, Lucid). Relevant Market Area (RMA) protest rights allow existing dealers to challenge new open points. California AB 1616 and related buy-sell legislation impose additional procedural requirements.

The 50-state franchise-law patchwork is the single biggest regulatory feature of dealership M&A. Each state defines the OEM consent standard slightly differently, but all give the manufacturer a meaningful say in who owns a franchised dealership. In practice, the OEM consent standard is usually “not unreasonably withheld” but with several enumerated grounds for refusal (buyer capitalization, dealer principal experience, CSI history, facility image commitments, geographic concentration limits).

OEMs also carry a right of first refusal (ROFR) in most franchise agreements. Toyota Motor Sales USA is known to exercise ROFR periodically to swap store ownership and rebalance regional coverage. The advisor should assume ROFR is on the table for any Toyota, Lexus, Honda, Acura or Subaru buy-sell and structure the LOI to allow the OEM’s exercise window without unwinding the deal.

Federal law adds a floor. The Automobile Dealers’ Day in Court Act (15 USC 1221-1225), enacted in 1956, gives franchised dealers a federal claim against OEMs that fail to act in good faith in performing or terminating franchise agreements. Combined with state franchise laws, ADDCA gives dealers meaningful negotiating power in adversarial OEM situations, but does not translate into a right to force approval of a specific buy-sell.

State direct-sales bans continue to be a live area of litigation as Tesla, Rivian, Lucid and other direct-to-consumer manufacturers challenge franchise laws state by state. This is largely a manufacturer issue but affects dealership M&A insofar as EV market share and OEM strategy influence franchise value. Relevant Market Area (RMA) protest rights allow existing franchise dealers to challenge OEM plans to open a new competing point within a defined distance (varies by state, typically 6 to 20 miles).

See the NADA regulatory tracker and state-by-state summaries via the NADA regulatory library.

How long does a car dealership business sale take from LOI to close?

From engagement to close, expect six to twelve months for a single-point and nine to fifteen months for a multi-rooftop group. LOI to close is typically 90 to 150 days because the OEM approval window (usually 60 to 90 days) runs in parallel with financial due diligence, real estate diligence, and state DMV licensing transfers. Sellers who assume dealership timelines match generic LMM timelines (60 to 90 days LOI-to-close) often miss the OEM approval window and lose their buyer.

Phase Duration Key activities Common delays
Preparation and normalization 30 to 60 days QoE, adjusted pretax normalization, real estate appraisal, RMA map, franchise agreement review, floorplan history compilation Missing DMS reports, incomplete facility image documentation, unresolved related-party leases
Marketing and buyer outreach 30 to 60 days CIM release to segmented buyer list, management meetings with top four to six buyers, indications of interest Buyer decision committees only meet monthly; luxury franchise adds two to three weeks to shortlist
LOI negotiation 2 to 4 weeks Price, structure (asset vs stock), real estate treatment, working-capital target, exclusivity period Real estate carveout disputes, ROFR uncertainty on Toyota family, seller-note requests
OEM consent process 60 to 90 days (runs in parallel with diligence) OEM buy-sell package, buyer financial statements, dealer principal biographies, business plan, facility commitment letter Buyer’s capitalization questions, facility upgrade negotiation, CSI concerns on the buyer’s other stores
Financial and legal diligence 45 to 75 days QoE finalization, environmental Phase I/II, ADA compliance, employment and labor review, IT and DMS diligence Aged inventory reconciliation, warranty labor rate audit, related-party lease normalization
Definitive agreements 3 to 5 weeks APA, real estate purchase agreement or lease, employment agreements, non-compete, escrow, working-capital true-up mechanics Escrow size on contingent liabilities, environmental reps, warranty tail obligations
Closing and post-close 1 to 2 weeks + 90 to 180 days true-up Floorplan payoff, contracts-in-transit clearance, DMV license transfer, employee transfer, parts inventory count, service work-in-process reconciliation Contracts-in-transit funding delays, parts count disputes, DMV backlog in some states

An experienced dealership advisor sequences OEM consent, real estate diligence and financial diligence in parallel from day one of LOI. A generalist runs them sequentially and adds three to six months to closing. Given that Q1 2025 US public-consolidator spend was $174M (down 91.1% YoY per Haig Partners Q1 2025 report), a slow process can also mean the buyer’s board approval expires before you close.

What fees does a car dealership M&A advisor charge?

Dealership M&A advisor fees typically combine a monthly retainer ($10K to $25K), a work fee credited against success ($50K to $150K), and a success fee scaled to transaction value. On a $30M to $150M enterprise-value dealership deal, success fees would typically range from 1.5% to 3.5% of transaction value, often on a modified Lehman or Double Lehman scale. Real estate can be broken out at a lower rate (0.5% to 1.5%). See the CT Acquisitions investment bank fees LMM guide.

Advisor type Typical deal-size sweet spot Success fee range Timeline (engagement to close) Best fit
Boutique dealership specialist $5M to $50M enterprise value single-point or small group 2.0% to 3.5%, modified Lehman common 6 to 10 months Single-point sellers, first-generation exits, real-estate carveouts
Regional investment bank with dealer group practice $25M to $250M enterprise value 1.5% to 2.5%, Double Lehman 7 to 12 months Multi-rooftop groups, family-office-backed platforms, complex real estate
Bulge-bracket investment bank $500M+ enterprise value platform trades 0.75% to 1.5%, custom scale 9 to 15 months Multi-generational family exits at platform scale (e.g., Herb Chambers, Larry H. Miller, Jim Koons)
Business broker (generalist) Under $5M, typically not a franchised dealership 10% to 15% flat Highly variable; rarely closes franchised deals Independent used-vehicle standalones, not recommended for franchised buy-sells

The dealership specialists most frequently named in the vertical are Kerrigan Advisors, Haig Partners, DHG (formerly Dixon Hughes Goodman, now Forvis Mazars), Presidio Group and Auxo Capital. On the largest transactions (Herb Chambers, Jim Koons, Larry H. Miller), Kerrigan Advisors and Bank of America have historically been the two most frequently mandated sell-side counterparties.

What red flags kill car dealership deals in due diligence?

The five red flags that most often kill dealership deals are OEM consent refusal (buyer not approved), aged inventory writedowns (used inventory over 90 days requiring reserve), warranty parts return liability (OEM claw-back on returned parts), related-party rent above fair-market with no landlord flexibility, and CSI scores below OEM incentive tier thresholds. Environmental issues at the site (Phase II required due to lift pits, paint booth history or historical underground tanks) are the sixth most common deal-killer.

OEM consent refusal is the number-one deal-killer and is often preventable. The advisor should present the top three to five buyers to the OEM regional operations VP before running a full process, either in person or by phone, to screen for informal red flags. A buyer with too many stores in a region, weak CSI at other locations, or a pending open-point elsewhere can be flagged early, saving three to six months of process time.

Aged inventory is the second most common surprise. Used-vehicle inventory over 90 days, wholesale-only units carried at retail, and warranty-parts returns pending manufacturer credit all inflate reported balance-sheet strength. QoE should reconcile aged inventory to realizable value and present the writedown as a purchase-price adjustment.

Related-party rent is the third. Many dealer principals own the dirt through a related LLC and charge the operating entity above-market rent to strip pretax earnings for tax reasons. This inflates the seller’s stated pretax when normalized, which buyers correct. Sellers should have a fair-market rent appraisal in hand and present a normalized pretax that already reflects fair-market rent.

CSI below OEM incentive tier is subtle but material. OEMs tier dealer incentives (Toyota Way, Lexus Elite of Excellence, MBUSA Best of the Best, BMW Center of Excellence) partly on CSI. A store below tier loses incentive dollars that flow to pretax. Buyers underwriting a store below tier will either discount for the incentive shortfall or require a turnaround plan and seller earnout tied to CSI recovery.

Environmental is the sixth. Dealership sites have historical lift pits, service floor drains, paint booth (body shop) history, and in older stores underground fuel storage tanks. Buyers require Phase I environmental site assessment as a matter of course; adverse findings can require Phase II and remediation escrow.

What buy-side services does CT Acquisitions offer to car dealership acquirers?

CT Acquisitions runs buy-side engagements for private multi-store groups, family offices, and strategic acquirers looking to add car dealership rooftops. Services include target identification within OEM RMA constraints, proprietary outreach to non-marketed sellers, valuation and Blue Sky benchmarking, OEM consent coordination, LOI structuring, and diligence quarterback across QoE, real estate, floorplan and DMV licensing. See CT Acquisitions buy-side M&A advisory and the PE add-on archetype.

Buy-side dealership advisory is a different discipline from sell-side. The buyer’s number-one problem is sourcing: with only 458 buy-sell transactions across roughly 700 franchises in 2025 (per Kerrigan Advisors), and public consolidators absorbing the largest and most-marketed portfolios, private groups and family offices competing for the same targets need proprietary deal flow.

CT Acquisitions builds proprietary buy-side pipeline through several channels: (1) direct outreach to identified single-point owners in the buyer’s target MSAs and franchise brands; (2) relationships with regional dealer associations, twenty-group facilitators, and OEM regional operations teams; (3) succession-planning outreach to owners 60+ years old without a family transition candidate; and (4) partnership with real estate brokers who see dealership listings before the operating business goes to market.

Once a target is identified, CT quarterbacks the diligence stack: financial (QoE via specialist provider), operational (twenty-group benchmarking, KPI diagnostic), real estate (appraisal, Phase I environmental, ADA), OEM (informal consent screening, facility image commitment), legal (franchise agreement review, employment agreements, dealer plate license transfer), and floorplan (lender introduction, curtailment history review). We coordinate the process so the buyer can close on schedule with predictable post-close outcomes.

How does CT Acquisitions source proprietary car dealership deal flow for buyers?

CT Acquisitions sources proprietary dealership deal flow through direct outreach to identified single-point owners within a buyer’s OEM franchise and RMA target, succession-focused outreach to owners 60+ without a family transition, twenty-group and dealer-association relationships, and coordination with dealership real estate brokers who see building listings before operating businesses go to market. Buyers get first look at non-marketed targets that would otherwise never see a competitive process.

Proprietary sourcing is the differentiator on buy-side. Public consolidators receive most large dealer-group opportunities directly from Kerrigan Advisors or Haig Partners in a competitive process, and the winner pays premium Blue Sky. A private multi-store group or family-office-backed platform that only competes in banked processes will pay through the nose for every rooftop and see IRRs compress accordingly.

The alternative is targeted, thesis-driven proprietary sourcing. For a buyer building density in a specific MSA around a specific franchise brand, CT identifies every single-point in the RMA, screens for owner age and succession status, and initiates confidential principal-to-principal conversations. The conversion rate on cold proprietary outreach is low (typically 3% to 8% of contacts produce a meeting, 20% to 30% of meetings produce a serious conversation, 20% to 30% of serious conversations produce an LOI over a 12- to 24-month build cycle), but the pricing on proprietary deals is materially better than banked processes, often 0.5x to 1.5x Blue Sky lower.

How do you interview and select a car dealership M&A advisor?

Interview at least three advisors and ask each: how many dealership deals they have closed in the last 36 months, which OEMs they have direct regional-operations relationships with, how they would sequence OEM consent versus financial diligence on your specific franchise, what Blue Sky range they would market at, and which of the six public consolidators plus which private multi-store groups they would prioritize on the buyer list. Ask for two seller references from stores of similar franchise and size closed in the last 24 months. Avoid advisors who cannot name specific twenty-group benchmarks for your franchise.

The advisor selection process is the single most important decision the seller makes. Concrete questions to ask each candidate advisor:

What questions should you ask before signing an engagement letter?

Before signing an engagement letter, confirm: exclusivity period and carve-outs (existing buyers, related parties), success-fee scale mechanics on real estate versus goodwill, tail period length (typically 12 to 24 months post-termination), reimbursable expenses cap, indemnification scope, dispute resolution forum, and process termination rights on both sides. Ask specifically whether the advisor is representing any active buyer for your franchise brand in your MSA (real conflict) and how they resolve it.

Beyond the standard investment banking engagement letter provisions, dealership-specific items to negotiate include: real estate compensation (many advisors charge a separate lower rate on real estate, some blend, some do not touch real estate), OEM ROFR outcome treatment (does the advisor still earn success on a ROFR exercise where the OEM directs the store to a specific buyer at a specific price), and process termination rights if OEM consent fails after LOI signing.

Recent car dealership transactions 2024-2026

The record 2025 year saw 458 buy-sell transactions covering roughly 700 franchises per Kerrigan Advisors, with public consolidators deploying $4.4B combined. Landmark deals include Asbury acquiring Herb Chambers Companies for $1.45B (33 dealerships, 52 franchises, 3 collision centers) in July 2025 and closing the $1.2B Jim Koons acquisition. Lithia added $1.16B annualized revenue via 11 US acquisitions in 2025. Q1 2025 US public-consolidator spend was $174M, down 91.1% YoY per Haig Partners, reflecting timing rather than a market slowdown.

Date Buyer Seller Deal size Dealerships / franchises Advisor / source
July 2025 Asbury Automotive Group (ABG) Herb Chambers Companies $1.45B 33 dealerships, 52 franchises, 3 collision centers Kerrigan Advisors advised seller. Source: Kerrigan Advisors
2024 Asbury Automotive Group (ABG) Jim Koons Automotive Companies $1.2B Multi-dealership Mid-Atlantic platform Kerrigan Advisors advised seller. Source: Kerrigan Advisors
2025 (full year) Lithia Motors (LAD) Multiple US sellers 11 US acquisitions, $1.16B annualized revenue added Various single-point and small-group targets Company press releases and Kerrigan Blue Sky Report
Q1 2025 AutoNation (AN) Colorado sellers Not disclosed Mazda and Ford points in Colorado Company disclosures
Full year 2025 Public consolidators combined Various sellers $4.4B combined US buy-sell spend ~80 franchises acquired by public groups Kerrigan Blue Sky Report: second-highest annual public-group spend on record
Full year 2025 All buyers combined Various sellers 458 buy-sell transactions Approximately 700 franchises sold Kerrigan Advisors: record year for transaction count
Feb 2026 Third-party buyers (OEM-directed) Asbury Automotive Group (ABG) Not disclosed 3 South Carolina dealerships divested OEM consent constraint on portion of Herb Chambers portfolio. Company disclosures
2025 (adjacent comp) Boyd Group Services Joe Hudson’s Collision Center $1.3B Collision repair scale reference (not franchise dealership) SEC 6-K filing; useful for aftermarket scale comparison

How does the CT Acquisitions dealership M&A process work for sellers?

CT Acquisitions runs a five-phase dealership sell-side process: (1) preparation and normalization (30 to 60 days), (2) buyer segmentation and OEM soft-consent screening, (3) marketing to public consolidators plus private multi-store groups plus family offices in parallel tracks, (4) LOI negotiation and OEM formal consent (60 to 90 days), and (5) definitive agreements, diligence and close. The goal is to compress total engagement-to-close to 6 to 10 months for a single-point and 9 to 15 months for a multi-rooftop group. See our sell your car dealership sub-hub for the full walkthrough.

Each phase has explicit deliverables. Preparation phase deliverables include the adjusted pretax normalization worksheet, three-year historical financial normalization, twenty-group benchmark scorecard, RMA map with competitor points, real estate appraisal, environmental Phase I, and OEM franchise-agreement review. Marketing phase deliverables include the buyer-segmented CIM with sub-versions for public consolidators versus private groups, management-presentation deck, virtual data room build-out, and OEM regional-operations soft-consent screening.

LOI phase deliverables include a competitively negotiated LOI with real estate treatment, working-capital target, exclusivity period and OEM approval mechanics defined. Definitive agreement phase deliverables include APA, real estate purchase agreement or long-term lease, employment agreements for key management, non-compete for the seller, escrow for contingent liabilities, and working-capital true-up mechanics.

How does CT Acquisitions coordinate OEM consent for dealership buy-sells?

CT Acquisitions engages OEM regional operations early (before formal marketing) to informally screen the buyer shortlist against OEM concerns (buyer capitalization, dealer principal experience, CSI at other stores, geographic concentration, facility image commitments). Formal OEM consent packages are prepared in parallel with financial diligence so the 60- to 90-day OEM approval window does not extend beyond the LOI-to-close target. On complex portfolios, CT sequences buy-sells by state DMV licensing complexity to accelerate close.

OEM consent management is the specialist skill that most differentiates dealership advisors. A specialist knows the specific decision-maker at Toyota Motor Sales, at Ford Motor Company, at Stellantis, at Honda, at MBUSA, at BMW NA, at Porsche Cars North America, at Lexus, and at Hyundai/Kia for each region, and knows the OEM’s operating priorities. A generalist has to learn all of this on the seller’s clock and often does not learn enough to prevent surprises.

Practical OEM consent coordination includes: pre-LOI buyer-shortlist screening with regional operations, formal buy-sell package preparation (buyer financial statements, dealer principal biographies, business plan, capitalization proof, facility commitment letter), buyer-side interview coaching with the OEM, and negotiation of facility upgrade commitments and geographic concentration mitigation where applicable.

What is the outlook for car dealership M&A in 2026 and 2027?

Dealership M&A activity in 2026 would likely continue at or near the 2025 record pace, with public consolidators disciplined on Blue Sky but active on premium franchises in top-100 MSAs, and private multi-store groups continuing to drive deal count. EV transition, OEM direct-sales pressure, and generational succession among owners in their 60s and 70s are the three demand drivers. Q1 2025’s 91.1% year-over-year decline in public-consolidator spend per Haig Partners reflects timing, not a market slowdown; deal flow rebalanced across the rest of 2025.

Three multi-year forces are shaping the vertical. First, generational succession: a large cohort of dealer principals who bought or built stores in the 1970s and 1980s are in their late 60s and 70s and considering exit. Kerrigan Advisors has repeatedly noted that generational succession is the primary supply driver of the current buy-sell market.

Second, EV transition is reshaping OEM-dealer economics. New-vehicle margins on EVs are structurally lower for most brands, F&I attach is different, and service revenue per vehicle over the ownership life is lower on EVs than on ICE vehicles. Buyers factoring EV mix into future earnings would typically discount stores with heavy exposure to brands under EV pressure and premium stores that have proven EV F&I and service revenue models.

Third, direct-sales pressure from Tesla, Rivian, Lucid and legacy OEMs experimenting with agency models creates franchise-value uncertainty. State franchise laws remain protective and ADDCA gives federal recourse against bad-faith OEM behavior, but the long-run risk to franchise value is nonzero and enters buyers’ discount rates.

Frequently asked questions

What multiple does a car dealership sell for in 2026?

Dealerships are valued in Blue Sky multiples on adjusted pretax earnings, not straight EBITDA. Kerrigan Advisors and Haig Partners agreed on 3.0x to 4.0x Blue Sky for small domestic single-points (Buick-GMC), approximately 7.5x for volume imports like Toyota, 4.5x to 5.5x for Kia, and 8.5x to 9.5x for luxury like Porsche in Q4 2025. Total EV/EBITDA on the public comps averaged approximately 12.0x with a median of about 8.4x per Auxo Capital.

Do I need OEM approval to sell my dealership?

Yes. Every state franchise law requires the OEM to consent to a buy-sell, typically within 60 to 90 days. The manufacturer reviews the buyer’s capitalization, dealer principal experience, CSI history, and facility commitments. Asbury Automotive was forced to divest three South Carolina dealerships in February 2026 after OEM approval failed on part of the Herb Chambers portfolio, which shows how OEM consent can force divestiture even after a $1.45B deal closes.

Which public consolidators are the most active buyers of car dealerships?

Lithia Motors, Asbury Automotive Group, AutoNation, Group 1 Automotive, Penske Automotive Group and Sonic Automotive together spent $4.4B on US buy-sells in 2025 per Kerrigan Advisors, the second-highest year on record. Lithia led with 11 US acquisitions adding $1.16B annualized revenue and Asbury closed the $1.45B Herb Chambers and $1.2B Jim Koons deals.

How long does a dealership sale take?

From engagement to close, expect six to twelve months for a single-point and nine to fifteen months for a multi-rooftop group. LOI to close is usually 90 to 150 days because the OEM approval window (typically 60 to 90 days) runs in parallel with financial due diligence, real estate diligence, and state DMV licensing transfers.

What fees does a car dealership M&A advisor charge?

Fee structures on dealership deals typically combine a retainer, a work-fee credited against success, and a success fee scaled to transaction value. On a $30M to $150M dealership deal the success fee often ranges from 1.5% to 3.5% of enterprise value, with modified Lehman or Double Lehman scales common. Real estate can be broken out separately at a lower rate. See the CT Acquisitions guide on investment bank fees for LMM benchmarks.

Can I sell my dealership real estate separately from the operating business?

Yes, and it is common. Public consolidators would often prefer to buy the operating goodwill (Blue Sky) plus tangible assets (parts, fixed assets, working capital) and either purchase the real estate or enter a long-term triple-net lease. Sellers often retain the dirt for post-close cash flow, but this requires a fair-market rent negotiation and buyer estoppel provisions.

What is a service absorption ratio and why does it matter?

Service absorption is the percentage of a dealership’s fixed operating expenses covered by gross profit from fixed operations (service, parts, body shop). NADA targets 75%, top-decile stores clear 80%, and the national average was 63.9% in 2025 per NADA. Buyers underwrite service absorption because it insulates the store from new-vehicle cycle risk; every ten-point improvement can add half a turn of Blue Sky multiple.

What is F&I gross per vehicle retailed?

Finance and insurance gross per vehicle retailed (F&I PVR) is one of the top three underwriting metrics for buyers. Public group average was $2,515 in Q2 2025 per public 10-Q filings, top independents run $1,800 to $2,200, and F&I PVR grew about 14% in 2025. Buyers pay premium Blue Sky for stores with consistent F&I PVR above the OEM twenty-group average.

Are private equity firms buying car dealerships?

Rarely as controlling sponsors. State franchise laws require OEM consent for ownership changes, and most OEMs will not approve a sponsor-controlled operator with a defined hold period. PE participation is largely through minority stakes in private dealer groups, with Redwood Investments and select family offices backing regional platforms. The main buyer universe remains the six public consolidators plus private multi-store groups.

Related resources

CT ACQUISITIONS

Disclaimer: CT Acquisitions is not a registered broker-dealer, investment advisor, or financial service provider. We act solely as a buy-side consultant and independent sponsor source. All information provided on this website is for informational purposes only and does not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or investment opportunity. We do not provide legal, tax, or accounting advice. Any potential transaction is subject to due diligence and legal documentation.

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