Automotive Risk Management Partners ARMP

Why Private Equity Buyouts Are Reshaping Dealership Vendor Options

Terry Dortch President, Automotive Risk Management Partners

Key takeaways

  • ARMP is a privately held company, not owned by a private equity firm or publicly traded, and is not part of a large consolidated group.
  • Terry Dortch states that private equity firms are increasingly buying up compliance companies and dealerships and forming them into large groups.
  • According to Terry Dortch, private equity owned and publicly traded companies focus on balance sheet, income statement, and profitability increases so they can be resold for a profit.
  • ARMP staff, including its president, are directly accessible to dealers by phone or email rather than being difficult to reach.
  • ARMP says it can adapt its program to fit an individual dealership's needs if a dealer suggests a change that makes sense.

Summary

Private equity firms have spent the last decade or more buying up compliance vendors and dealership groups alike, consolidating a business that used to be built on entrepreneurs running their own shops and passing them to their kids. When a compliance provider is owned by private equity or answers to shareholders, the focus shifts to balance sheets and resale value rather than the quality of the service or product a dealership actually receives. That consolidation trend is reshaping who dealers can even reach when they need help, and who ultimately sets pricing and terms across the industry.

For a dealership choosing a compliance partner, this matters because vendor ownership affects access and responsiveness, not just price. ARMP is privately held, not backed by a private equity firm or traded publicly, and is run by people with long car business experience who want direct relationships with their dealers. The practical payoff, in the speaker's view, is accessibility: dealers can reach decision-makers directly rather than getting routed through a large corporate structure, and the program can be adjusted to fit a specific store's needs rather than a standardized, shareholder-driven product.

Transcript

Private equity consolidation in the industry

Hi, I'm Terry Dortch, Automotive Risk Management Partners. You know what I want to talk to you today about? I want to talk to you today about the overall business climate in our country. It has taken some major, major changes the last, let's say, 10 years, maybe even longer. And when I say that, what it's done is there's all these private equity firms are accumulating everything, they're buying everything up. They buy up the compliance companies, they're buying up dealerships and forming these big groups. And the days of going out and being an entrepreneur and starting your own business and running that business and passing it on to your kids, those are becoming less and less.

Concerns about private equity-owned vendors

And I don't, personally, my opinion, I don't think it's a good thing. I don't think the services is good. I don't think that the products that are being produced are as good. I personally just don't, I just don't think, because they're worried about a stock price. Not necessarily, let's say they're not private or publicly traded, because if it's a private equity firm then they're packaging it up to resell it, same thing. The bottom line is that their focus is really on the balance sheet, income statement, and being able to show an increase in overall profitability so that they can turn it and make a profit. And then they'll buy it, they'll buy another company, add to it, they'll turn it and make a profit.

Where this consolidation trend is headed

So, obviously, that domino is going to come, I think it's got to come to an end. I don't know when or how, but you can't keep doing that at some point, because then all you're going to have is you're going to have all these big major companies, and they're going to dictate pricing, they're going to dictate everything.

ARMP's privately held ownership structure

We're not, we're not held by a private equity firm. We're a privately held company that consists of a bunch of people that have been in the car business a long time, understand it, work within it, and want to work with their dealers. So we're not owned by, you know, ABC Capital Group. We're not owned by XYZ, you know, marketing firms. We're not traded on a public platform.

Direct access to ARMP leadership

The bottom line here, the reason I'm telling you that, is if you picked up the phone today and tried to call and talk to me, I'd answer it, it's right here, I'd answer that phone. Try picking up the phone and calling the president of any one of your other vendors, probably isn't going to happen. Some of you might get away with it if you're a Hendrick's, you're a Lithia, yeah, you're going to get through to whoever you want to get through to. But if you're not, you're probably not getting through to them. Our people have my cell phone. We're not a big huge mess, we're easy to talk to, we're easy to communicate with. And by God, if you had something, you know, if you looked at our program and said, "Hey, T, I think we need to do something like this," and if it makes sense, we're going to do it for you.

ARMP's approach to customizing service for dealers

So my bottom line is, what I'm trying to tell you is this: we're a company that can be formed around your organization to fit your needs and provide you with the protection that you need. And at the same time, we're going to assist you in other areas. I mean, we're there to help our dealers.

Anyway, I just wanted to talk to you a little bit about that. Give us a call if you want to talk to us. All of our information is right here on the screen. You can give us a buzz, shoot me an email, whatever you want to do. Thanks, take care.

Questions this video answers

Is ARMP owned by a private equity firm or publicly traded company?

No. Terry Dortch explains that ARMP is a privately held company made up of people with long careers in the car business, and it is not owned by any capital group or marketing firm, nor is it traded on a public platform.

Why does it matter that ARMP isn't part of a big consolidated group?

Terry Dortch says that unlike large private equity owned vendors, dealers can actually pick up the phone and reach him directly, since ARMP is small and easy to communicate with rather than being a big, hard to reach organization.

Can ARMP customize its program for a specific dealership's needs?

Yes. Terry Dortch says if a dealer suggests a change to the program that makes sense, ARMP will implement it, forming the company's services around the dealership's organization and needs.

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Covered in this video

  • Private equity consolidation
  • Vendor ownership structure
  • Dealership vendor selection