Equipment dealer mergers and acquisitions picked up during the first five months of 2024, with the trend likely to continue into next year.
Dealer M&A activity reached an all-time high to start the year, Pat Albero, partner, equipment and commercial truck divisions at Performance Brokerage Services, told Equipment Finance News.
“For our company, having transacted 900-plus dealership transactions over 30 years, we are at an all-time high in 2024 on an unbelievable amount of transactions that are going forward, and to be fair, it’s all manufacturers,” he said. “There’s just a lot in the ag space specifically, but there’s a lot of movement, and I don’t see that slowing down for any reason, through the end of 2024 and through 2025.”
May transactions
The following five equipment dealer mergers and acquisitions were announced in May:
- Canadian tractor dealers Agland and Martin Deerline said May 31 they would merge to form Horizon Ag and Turf, effective July 31;
- Texas-based WCTractor said May 30 it would buy fellow Texas-based dealer Hammer Equipment;
- Midwestern truck dealer M&K Truck Centers said May 29 it would acquire Ohio- and Pennsylvania-based Austinburg Truck Center;
- California-based Belkorp Ag said May 20 it would buy Firebaugh, Calif.-based Thomason Tractor; and
- Nationwide equipment dealer RDO Equipment Co. said May 20 it would acquire Nevada- and Utah-based Rocky Mountain Transit & Laser.
All five transactions were dealerships acquiring other dealerships, a trend that will persist, Albero said.
“A lot of dealers are still flush with cash coming out of COVID,” he said. “They still need to put that to work, and one of the keys in the conversations we have with the OEM … the buyer for a dealership is a dealer, meaning that someone outside of the dealership space to invest into a dealership is very rare. For a dealer to buy a dealership, it’s why you’re seeing diversification.”
Market conditions
Meanwhile, elevated interest rates are unlikely to deter M&A through this year, as the opportunities continue to be limited and the fear of missing out pushes more activity, Albero said.
“The interest rates, the markets, the temperature of politics and things, none of that, in our opinion, will change the narrative coming into the end of the year and getting into 2025,” he said. “It’s just going to be the opportunity, the rarity of the opportunity, and what region that [the sellers] are in, that will make sense to those local dealers.”
Still, the details remain key for dealers engaging in M&A, Peter Young, president of Belkorp Ag, told EFN. Belkorp Ag has announced plans to acquire Thomason Tractor.
“You have to have a willing buyer and a willing seller, and that depends on lots of circumstances, so we’re just taking them as they come up, looking at them, and we’re not going to ever say no to an opportunity,” he said. “We think there’s a price if the price is right. We want to continue to go down that path.”
Belkorp Ag also views the John Deere dealer network as a support to its M&A strategy, as long as it follows the Deere playbook, Young said.
“We have a little bit of a momentum on acquiring John Deere dealers and putting [them] into our network, something we would love to do more of if the opportunities arose,” he said. “We like the space and we like the consolidation benefits that [are] provided not only to us, but to our customers, so we will continue to look for opportunities as they present themselves.”
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