The End of the M&A Lottery – Why Earnings Quality Now Outweighs the Multiple | George Karolis, President of The Presidio Group

Jan 27, 2026

George Karolis, President of The Presidio Group, an auto‑retail investment banker with deep M&A experience, breaks down why earnings quality now matters more than sky‑high multiples. He discusses who is buying and selling, why big groups keep getting bigger, tech as a valuation lever, brand and geography-driven demand, and where diligence trims value.

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INSIGHT

Post‑COVID Profits Fueled Ongoing Consolidation

Post-COVID profits created a consolidation flywheel as dealers gained liquidity and cash to acquire others.
George Karolis says publics deployed ~$25B and new buyers keep entering, driving sustained M&A activity.

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ADVICE

Buy Earnings, Not Just Multiples

Prioritize the quality and sustainability of earnings over chasing a headline multiple.
Evaluate what earnings will continue forward because you're buying future cash flow, not just a multiple number.

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INSIGHT

Use Revenue Multiples To Reduce Noise

Revenue multiples can smooth noise caused by one-off earnings variability across dealers.
George Karolis suggests revenue-based measures as a more stable benchmark for blue sky valuation.

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Current M&A Market Is Very Active

01:02 • 47sec

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Post‑Pandemic Liquidity and Buyer Influx

01:49 • 3min

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Industry Performance: Normalizing After Levers Fade

04:28 • 2min

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Brand & Geography Drive Demand Differentiation

06:09 • 3min

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Toyota's OEM Relations and Throughput Advantage

Focus on Earnings vs. Multiples

12:17 • 3min

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Technology Added to Valuation Matrix

14:53 • 1min

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Buyer Sentiment: Discipline and Growth Intent

16:00 • 4min

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Tech Adoption Gap Could Drive Transactions

20:16 • 2min

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Sellers: Portfolio Management Replacing Pure Exits

22:46 • 2min

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Brands to Watch: Softness and Contrarian Opportunities

Where Earnings Haircuts Occur in Diligence

27:13 • 2min

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Geography Nuances and Active Markets

29:38 • 3min

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Fragmentation Means Years of Consolidation Ahead

32:30 • 1min

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Dealers' Top Concerns: Affordability and OEM Pressure

33:48 • 2min

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Portfolio Review and Optimization Advice

35:42 • 1min

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Efficiency Wins: Employee Productivity and Customer Flow

37:00 • 2min

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Outlook: Strong Pipeline and Thought Leadership

Today I’m joined by George Karolis, President of The Presidio Group.

George breaks down the tension between record-high blue sky multiples and the rising cost of capital, offering a rare look at who is buying, who is selling, and why the "big get bigger" trend is accelerating.

Visit @ ⁠https://thepresidiogroup.com/v2ud⁠ to download the data discussed in today’s episode. This episode is brought to you by:

1. Amazon Autos - Sell vehicles to online shoppers who can now buy or lease at Amazon Autos. Upload your inventory of new, used, and certified pre-owned vehicles to our online marketplace, where purchase-ready customers can browse, purchase online, then pick up at a local dealership. Learn more @ https://sell.amazon.com/programs/autos

2. fullthrottle.ai - fullthrottle.ai® is a next-generation AdTech powerhouse. The Automotive DSP™ is built specifically for the auto industry, combining advanced programmatic targeting, real-time bidding, and analytics tailored to drive dealership and OEM performance. With fullthrottle.ai®, marketers can reach the right car shoppers at the right moment and optimize toward real business outcomes like test drives, leads, or sales. https://www.fullthrottle.ai/ bridges the gap between auto media buying and results-driven marketing.

3. The Presidio Group - The Presidio Group is one of the longest standing investment banks entirely focused on the auto retail sector in the United States and was founded in 1998 with the simple mission to relentlessly put the interests of its clients first. During their careers, the professionals at Presidio have collectively closed more than 300 transactions for over $20.0 billion. The Presidio Group, based in Denver and Atlanta, publishes Presidio Perspectives: A Quarterly Outlook on Auto Retail and M&A Trends, a leading source of information about the automotive retail landscape. Click here to subscribe to our market insights: https://go.thepresidiogroup.com/cdg-x-the-presidio-group-strategic-insights-for-the-road-ahead

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