Business Acquisitions and Dispositions |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Acquisitions and Dispositions |
During 2025, in an effort to expand and diversify our business, we acquired five businesses in our Franchised Dealerships Segment and were awarded one franchise in our Powersports Segment, which was previously an authorized retail outlet in Sturgis, South Dakota. The businesses acquired in our Franchised Dealerships Segment were Jaguar Land Rover Los Angeles, Jaguar Land Rover Newport Beach, Jaguar Land Rover San Jose, Land Rover Pasadena and Jaguar Land Rover Santa Monica for an aggregate gross purchase price of approximately $440.3 million. The allocation of the aggregate gross purchase price included inventory of approximately $166.1 million, property and equipment of approximately $9.4 million, goodwill of approximately $64.2 million, franchise assets of approximately $202.0 million, other assets of approximately $1.8 million, right-of-use assets of $88.0 million, lease liabilities of $88.0 million, and other liabilities of approximately $3.2 million.
The accompanying consolidated statements of operations include revenue and earnings attributable to the businesses acquired during 2025 of approximately $284.9 million and $8.3 million, respectively. Acquisition costs recognized as an expense in the 2025 consolidated statements of operations related to these acquisitions were immaterial. Additionally, the total amount of goodwill and other intangibles (franchise assets) from these acquisitions that is expected to be deductible for tax purposes related to these acquisitions is approximately $266.2 million.
The following unaudited pro forma summary presents consolidated information as if the 2025 acquisitions had occurred on January 1, 2024:
During 2024, in an effort to expand and diversify our business, we acquired two businesses in our Franchised Dealerships Segment: North Point Volvo and Audi New Orleans. Additionally, we acquired one business (consisting of two locations) in our Powersports Segment: Motorcycles of Charlotte and Motorcycles of Greensboro. The aggregate gross purchase price of the businesses (including inventory acquired and subsequently funded by floor plan notes payable) was approximately $55.3 million. For North Point Volvo, we purchased the remaining 50% interest that was previously accounted for under the equity method. The purchase price of this acquisition was allocated based on information currently available to the tangible and intangible assets acquired and liabilities assumed utilizing the stock acquisition method of accounting. The acquisition of the remaining 50% interest represented $21.1 million of the total aggregate gross purchase price and included inventory of approximately $10.7 million, property and equipment of approximately $0.2 million, goodwill of approximately $3.5 million, franchise assets of $6.0 million, real estate of approximately $12.4 million, other assets of approximately $1.7 million, and other liabilities of approximately $3.0 million. Due to the acquisition of the remaining 50% of interest, we have recognized a gain of $3.5 million on the initial investment recorded. The allocation of the remaining $34.2 million of the total aggregate gross purchase price of the two other businesses included inventory of approximately $17.2 million, right-of-use assets of $13.3 million, property and equipment of approximately $0.3 million, franchise assets of approximately $6.9 million, goodwill of approximately $7.8 million, real estate of approximately $5.2 million, other assets of approximately $0.1 million, lease liabilities of $13.3 million, and other liabilities of approximately $3.3 million.
During 2023, we acquired one business (consisting of five locations) in our Powersports Segment for an aggregate gross purchase price (including inventory acquired and subsequently funded by floor plan notes payable) of approximately $75.1 million. The allocation of the aggregate gross purchase price included inventory of approximately $11.1 million, property and equipment of approximately $0.7 million, franchise assets of approximately $22.6 million, goodwill of approximately $11.9 million, real estate of approximately $29.0 million, other assets of approximately $0.1 million, and other liabilities of approximately $0.3 million.
Results of acquired dealerships are included in our accompanying consolidated statements of operations commencing on the date of acquisition. Our acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. Goodwill is an asset representing operational synergies and future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The fair value of our manufacturer franchise rights are determined as of the acquisition date, by discounting the projected cash flows specific to each franchise. This analysis includes projected revenue, projected operating margin, a discount rates (and estimates in the discount rate inputs) and residual growth rates.
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