When Alex Morton joined Gregg Young Automotive Group as CFO nearly 10 years ago, the company operated two dealerships. Today, the group runs 12 rooftops across three states after completing seven acquisitions between late 2022 and early 2024.
"A large majority of my time has been spent on the buy-sell front and working through the acquisitions," Morton told Daily Dealer Live hosts Sam D’Arc and Uli de’ Martino.
For context: Gregg Young now operates primarily domestic franchises in the Midwest, including eight Chevy stores, Stellantis, Cadillac, and Ford brands, and two Toyota points.
At a high level: When Morton evaluates a deal, he uses three criteria: location, OEM reputation, and performance.
Location determines market size and proximity to existing operations. The group shifted its focus toward larger markets after acquiring smaller, underperforming stores with upside potential.
And the OEM matters significantly too. Toyota and Lexus points generate immediate interest, while the group's GM expertise makes those franchises attractive targets.
But beyond the dealership itself, Morton looks for the right general manager.
"We believe that the folks running the store should be partners in some respect," he said. The group offers flexible arrangements like sweat equity paths or immediate buy-in options for those with capital.
Why it matters: Most dealer groups pursuing acquisitions underestimate two critical factors: the selectivity required (Morton evaluates 10 deals for every one he closes) and the cash flow pressure that intensifies with growth rather than easing. Private groups scaling from 10 to 50 rooftops now dominate the competition, making Morton's approach increasingly disciplined.
Zooming in: Multipliers dominate buy-sell conversations, but Morton focuses on what those multiples represent.
"The multipliers are pretty consistent—four or five, seven, nine times. But the question is, nine times what, or four times what," he explained.
The team analyzes whether multipliers apply to current earnings, three-year averages, or projected performance, and then determines the areas of opportunity.
"I love fixed ops because you can make small changes. There's so many customers coming in and out of the drive," he said.
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Between the lines: Morton also looks beyond bottom-line figures to uncover hidden problems.
Ad-backs and rent charges can obscure true operating expenses.
On top of that, used car inventory creates frequent closing complications because dealers without aging policies may show strong gross profit while sitting on problem inventory that hasn't hit the P&L.
And at closing, inventory valuation becomes a sticking point.
"Everybody thinks their car is worth more than what somebody is going to pay," Morton noted.
What's next: Gregg Young continues evaluating deals in 2025, focused on larger markets with the right combination of brand, performance opportunity, and leadership talent ready to become partners in the business. But cash flow management remains Morton’s primary concern.
"It's crazy to think that the more you sell, the tougher cash gets," he said.
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