The pace of dealership M&A has been much slower than expected in 2012, says Alan Haig, head of Presidio’s automotive services. Potential sellers are holding off  as their business picks up. And in at least one recent case, a buyer backed out at the last minute because of fears about the economy.

“It is a frustrating time for us because we find lots of people are interested in buying dealerships, but not very many people that are interested in selling dealerships,” said Haig. “It’s an asymmetric market, which surprised us. We were expecting a higher level of activity this year than last year.

In the 1st quarter of 2011, U.S. public companies spent $113.2 million on acquisitions in the United States, Haig said. This excludes acquisitions done in the UK or Germany. In the first quarter of 2012, that number fell to $55.3 million - a 51% decline.

Haig said last year a little over $500 million was spent by the public companies on acquiring dealerships.

“We thought that number would trend up towards a more normal range than we saw prior to the recession, which was somewhere between $500 million and $1 billion per year,” he said. “But what we’re seeing is a decline in transactions.

“I attribute it to sellers deciding: “Hey, I’m making lots of money right now. I’m likely to make more money in the future because the rate ... of new vehicle sales is still a good bit lower than where it has been historically.”

He said the deals Presidio is seeing are going at strong multiples “because you have high demand, low supply, and the clearing price is pretty high.”

“So we are telling people who are interested in exiting that, in our opinion, this is a perfect time to do it -- especially if your business has a little bit of hair on it; where there’s a real estate problem, or you have a couple of franchises which historically have not been very desirable.”

Indeed, the buyers are out there, he said.

“Buyers are more or less omnivorous,” Haig said. “They are interested in just about every franchise. It used to be large buyers were more interested in Sunbelt states, now we are seeing greater interest in the Midwest and Northeast.”

Haig said it’s not just public companies on the prowl.

“We’ve met with almost all of the other groups ... and I think everybody says: “Hey, I’m making lots of money. My borrowing costs are as low they’ve ever been.” [I’m] quite comfortable buying real estate. “

Also, he said there are a lot more dealerships attracting interest today.

“For many years when the domestics were losing a lot of share you couldn’t buy a Ford store and be confident that you would get a decent return,” he said. “You couldn’t touch a Chevy store or Chrysler Jeep or Dodge. Now those businesses are showing nice signs of sales growth so those are of interest.”

Haig said Presidio was recently worked on the sale of a dealership that simply collapsed.

“We got an excellent value and we were negotiating the final points. And the buyer, the week that we were expecting to sign the agreement, got spooked, pertly by what was going on in Europe and decided not to go forward,” he said. “So while I say, it’s kind of a seller’s market, there are factors outside of the U.S. that do give leading buyers some concerns.”