Dealer Group Roll-Up: research file

The idea

We join 5–8 family-owned franchised dealer groups (3–10 stores each) into one national group, all closing on the same day, and run it on one operating system. Working name: Acquisitions.com + CarDealer.ai operational roll-up.

• Why dealers say yes: a fair price today, most of it as owners of a bigger group, and they keep running their stores under their own names.
• Why it is worth more together: private groups sell for a low multiple of profit. The public groups below trade at 6–10× earnings and are bought by their founders at a premium (Penske, Oct 2026). Part of the gap pays for the deal; the rest is upside.
• Our edge: CarDealer.ai voice AI + CRM in every store, one in-house marketing agency instead of $50–100k a month of outside vendors per group, and central buying.

Our structure (internal, not in the letter)

The sponsor company is split 50/50 between Moran and Jon, as agreed on the 19 Oct call. A seed investor and the future CEO/CFO come out of both halves equally.

Jon is paid in sponsor shares, never per-deal fees: a fee per deal can make him an unlicensed broker (lawyer to confirm). CarDealer.ai stays Jon's company; the group signs it as a vendor on normal terms, disclosed to every dealer as a related party.

The old three-step plan (the letter now uses a six-step flow)

About 12–15 months from today to one closing day. Each step has a gate; we do not move on until it is met.

1. Anchor (months 0–2). Jon's ~9-store operator signs a non-binding letter. Jon picks his 20 closest dealer-group owners. We form the sponsor company and hold first calls with the securities lawyer and the banker.
   Gate: anchor signed; banker says what size of group they would take to market.
2. Five groups (months 2–6). We meet the 20 and sign 5 letters at the same price menu. We pay for a review of each group's numbers. We open talks with the manufacturers and a floor-plan lender.
   Gate: no OEM refuses, and a floor-plan lender's term sheet is in hand.
3. One closing (months 6–15). One founder agreement for all groups, audits, then every group closes on the same day as the listing. If the market is shut, we close privately first and list later.
   Gate: every dealer sees the holding company's cash and the lender's terms before signing.

What a dealer group gets

Every group gets the same menu. The more shares an owner takes, the higher the multiple.

To confirm with the banker for dealers: the menu prices the goodwill ("blue sky"); vehicle and parts inventory is bought at cost and runs on floor-plan credit; real estate can stay with the family and be leased to the group.

The owner also keeps his stores' names and team, a 5-year contract to run them, a board seat for the larger groups, and we pay for the review of his numbers. He pays for nothing.

What Jon can say to a dealer (no talk of listing or stock)

"We're putting together a group of the best family-owned dealer groups in the country. You keep running your stores, under your name. You get a fair price, part cash at closing, the rest as an owner of a much bigger group. Every store gets CarDealer.ai and an in-house agency, so your vendor bill drops. Would you take a 20-minute call with my partner Moran?"

Keep the first call short and get Moran on it fast. Send nothing in writing about a listing until the lawyer sets the rules.

The public comparables

Closing prices 19 Oct 2026 (stockanalysis.com). The six franchised groups together are worth about $34B on $153B of sales.

No franchised new-car dealer group has listed in the US from 2020 to 2026. Small listed vehicle roll-ups (boats, RVs, powersports) mostly lose money and trade at 2–15% of a year's revenue: debt-funded buying plus a fall in demand. Store counts marked ~ are approximate; Vertu market value not verified (n/v). Source: stockanalysis.com, 19 Oct 2026 close. The "What they own" column for the first nine rows is in the letter.

How they went public

Only Group 1 did what we plan: buy the founding dealers at the same moment as the IPO. Most of the money came from lenders (floor-plan credit), not the IPO, which raised $27–190M each.

How carmaker (OEM) approval works

• Change of control: today's 10-Ks let a carmaker buy back or force the sale of its stores if anyone takes 20% of the group (5% if the buyer is another carmaker). A sponsor above 20% needs approval in advance.
• Store caps: in the 1990s Toyota allowed 7 Toyota + 3 Lexus stores per group, with 9 months between deals; Honda 7 Honda + 3 Acura. Today's caps are confidential.
• Timing: Group 1's first approvals took "almost one year". California gives the carmaker 60 days to answer a transfer; silence counts as yes.

Sources: IPO prospectuses, FY2025 10-Ks and 2026 proxies on SEC EDGAR; full notes with a link per number in our research file. Reverse mergers and SPACs are in the next section.

Reverse mergers and SPACs: the shortcuts

No franchised dealer group has gone public by a lasting reverse merger into a shell. SPACs in car retail mostly ended in bankruptcy or delisting.

What we take from it: SPAC trusts mostly vanish (72–99% redeemed outside the 2021 boom), so the private investors (PIPE) are the real money and want preferred terms. SPAC sponsors took 7–20%; a shell promoter asked for 50%. Pay sellers partly in stock that vests on performance.

Manufacturer (OEM) rules: what is possible and what is not

1. Can a group take its franchise into the public company?

• Only with each carmaker's written consent. A change of control without consent, including at the parent company, is grounds to terminate the dealer agreement (Asbury 10-K 2025).
• Carmakers can step in and buy the store themselves (right of first refusal). State law limits this: Pennsylvania makes the carmaker match the price and pay the buyer's costs; in Georgia, Mercedes used it to block a package sale (BFKN).
• Timing: about 60–90 days per carmaker in practice; some approve only the day before closing (Auto Remarketing). Group 1's first approvals took almost a year.
• State limits on refusal: California gives 60 days, silence = yes, a refusal must be written with reasons (Veh. Code §11713.3). Florida lets the carmaker refuse only on character or written, uniform financial/experience standards, within 60 days (§320.643). Other states not checked.
• Open question for dealer-law counsel: these laws were written for selling one store. Whether a parent company listing counts as a "transfer" is not settled.

2. Rules the carmakers set for public groups

• Framework agreements. The carmaker can buy back the stores if anyone takes 20%+ of the votes, another carmaker takes 5%+, there is a merger or sale, or the board changes materially. They also cap stores per brand per area and nationally, and block new purchases if existing stores of that brand underperform (Penske 10-K 2025; Asbury 10-K). So no sponsor or investor should hold 20%+ without approval in advance.
• A named person in charge. Each store's operator and general manager need carmaker approval. In the 1990s carmakers opposed most dealer IPOs because they wanted one accountable person; Lithia's founder won them over by promising he, not shareholders, would control the company (history). Expect the anchor operator, or the CEO, to be the named controlling person.
• Money tests: minimum working capital, sometimes minimum net worth, and required facility upgrades (Asbury 10-K).
• Toyota/Lexus caps still bite: 1997: 7 Toyota + 3 Lexus, max 20% of a metro, 9 months between deals; mid-2000s: up to 5% of national sales. In H1 2026 Penske had to sell a Lexus store to stay inside its cap. Current Toyota and Honda caps are not public.

3. Does someone who already owns a Nissan store have an edge buying more?

Yes, if their stores perform. Carmakers check the buyer's experience, money and compliance with their standards, and framework agreements block new purchases of a brand when the group's existing stores of that brand miss targets (sales effectiveness, customer satisfaction). A proven Nissan operator is the natural buyer of more Nissan stores; an underperforming one can be blocked. Market-share caps and the carmaker's right of first refusal still apply. Other dealers' territory protests usually concern new or moved stores, not ownership changes (unverified state by state).

4. Floor-plan lenders

New-car stock at public groups is financed mostly by the carmakers' own finance arms (Penske 10-K). Floor-plan agreements need the lender's written approval for a change of ownership, and the lender can call a default on a "material adverse change"; one captive lender once pulled all floor plan from a group after an acquisition (WardsAuto). Expect a new facility, new guarantees and working-capital covenants. The change-of-control terms of NMAC, GM Financial and Ally were not found.

5. Blue sky: what the market pays for a store today

Multiples of pre-tax earnings for the goodwill only (inventory and real estate on top). Haig Report Q2 2026 (PDF):

6. Red flags to check in every group

1. Any carmaker likely to refuse, or to use its right of first refusal, at any store. The agreements must let a store be dropped.
2. Framework triggers (20% / 5% / board change) that limit who can own our shares.
3. Brand caps per market, Toyota/Lexus above all; may force sales at the listing.
4. Weak sales-effectiveness or customer-satisfaction scores, which block buying more of that brand.
5. Facility upgrades promised to the carmaker but not yet built (can be a condition of approval).
6. Who is the approved operator and general manager at each store, and will they stay.
7. Real estate owned by the family: leases must be at market rent and disclosed.
8. Floor-plan consents and any cash gap at closing.
9. State dealer licences reissued for each store.
10. Warranty and incentive chargebacks from carmaker audits of the years before closing: hold back part of the price.
11. Finance & insurance compliance (FTC, state law, CFPB) and F&I income that can be clawed back.
12. Family-owned side businesses (insurers, warranty, reinsurance, advertising) to unwind or disclose.
13. The carmaker's own health (Nissan's turnaround, Stellantis quality issues).

Not found, to ask dealer-franchise counsel and each carmaker's network development team: current Toyota/Honda caps; NMAC, GM Financial and Ally change-of-control terms; Nissan, Mitsubishi, GM and Stellantis policies on public ownership; Texas and other state laws; a Mitsubishi multiple; whether state transfer laws apply to a parent company listing.

Rules we hold to