Dealerships Are Far Too Valuable To Be Sold Any Other Way

February 2, 2016

Picture of first presidential debate

Buy/Sell Activity TodayAn Increasingly Crowded Field

Public Dealership Stock Index Compared to the S&P

3.9x higher

Public Dealership Stocks Outperform the S&P 500 Wall Street Thinks Auto Retail is a Great Investment

Source: Yahoo Finance for data through 12/23/15

+319.0%

+82.2%

Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 1580

130

180

230

280

330

380

430

480

S&P 500 Public Auto Dealerships

Dec 15

Average Dealership Return on Equity

25.3%

Industry Consistently Produces VERY High Return on EquityHighly Attractive to Outside Capital

Source: NADA

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

24.3%

30.7%

27.6% 25.1% 24.3% 23.5%

22.7% 22.0%

12.4%

18.0%

24.8%

28.0% 27.8% 29.0%

31.9% 33.3%

EXTERNAL FACTORS

Industry ConditionsOEM PerformanceFinancial Markets

Domestic Economy

INTERNAL FACTORS

Current ProfitsManagement

FacilitiesSales Effectiveness

Biggest Driver of Buy/Sell Market – External Factors Internal Factors Are Irrelevant, if External Factors Aren’t Strong

Source: NADA

Kerrigan Advisors Blue Sky Multiples – 3Q 2015 Top Volume Franchises Command Higher Multiples

Kerrigan Advisors Blue Sky Multiples – 3Q 2015 Top Luxury Multiples Have Few Limits

* Note: Jaguar would command the lower multiples and Land Rover would command the higher

Average Blue Sky Multiple

AdjustedBlue Sky Multiple

Earnings Growth

Expectations

Buyer Demand

Real Estate

Market Vehicle

Preference

Higher Multiple

Lower Multiple

LowGrowth

LowDemand

High Rent/Building Project

FranchiseUnsuitable

FranchiseHighly

SuitableHigh

GrowthHigh

DemandLow Rent/

Image

Drivers of Franchise Multiple Variability Four Key Factors

2010 2011 2012 2013 2014 2015E 2016E

11.6M

12.8M

14.4M

15.5M16.5M

17.5M18.0M

Annual Vehicle Sales Sales Growth Rate

12% 10%

13%

8%6%

6%

3%

Annual Auto Sales and % Growth

Return to 18.0 Million Sales Means Slower Future Growth Sales Rebound Near Completion?

Source: Automotive News and Kerrigan Advisors Analysis/Estimates

Public Dealership Groups’ Average P/E Multiple

22.2x

Public P/E Multiples Down 40% Since 2010 Leading Indicator for Private Multiples?

Source: Yahoo Finance

“And we've been able to make these acquisitions at significant discounts to where we trade. So, we feel like when we

make those buys, we gain an arbitrage

opportunity on day one.”

Craig T. Monaghan, Asbury Automotive

2012 2013 2014 2015e 2016e

13.3x

15.6x 16.0x

13.3x

10.7x

Future of the Industry – Hard to Call Often Full of Surprises