Ben Keating is an Aggie, that is, he graduated from Texas A&M University. Anyone who knows an Aggie will know that they harbor a life-long fondness for College Station, the small Texas town where the huge university is located.
Keating is no different, and that fondness was a driving factor in his recent acquisition of four automotive dealership franchises in Bryan, Tex., the town adjacent to College Station.
“College Station is a mecca for us,” Keating tells Automotive Buy Sell Report.
School loyalty alone wouldn’t have prompted Keating to pay what he admits was a high price for the franchises, however. The shrewd businessman sees value where others might not and has an acquisition track record that validates his instincts.
Keating acquired Hyundai, Volkswagen, Mazda, or BMW franchises in Bryan from the Garlyn Shelton Auto Group and renamed them the Brazos Valley Imports. Keating didn’t have those brands in his group, which helped him justify such a high price.
“We paid a lot of money for the stores, but we feel there is value there,” he says.
The Bryan/College Station economy is largely based on the huge state-owned educational institution in its midst, so the economy is almost recession-proof, says Keating. And, he wanted to diversify by acquiring the four new franchises.
There is one aspect of the recent acquisition he doesn’t really want to repeat however: Working with four new manufacturers at the same time to complete the deal.
“It was challenging,” says Keating.
Had one of the franchises been Ford or FCA, things would have been different. Keating has a long history with those manufacturers. It would have been easy to go into the deal and “hit the ground running,” says Keating.
Now that he is actually running the stores, there are more differences. “With these four I feel like I am starting in preschool,” he says. “I don’t know how to order a car, I don’t know how to look up an incentive. It has been really complicated.”
Ben Keating
Still, he says, “I am excited.”
The recent acquisition brings his dealership count to 14 rooftops representing 15 different brands. Besides the four new franchises, Keating owns four Chrysler Dodge Jeep Ram stores; three Ford stores, including a Ford/Lincoln dealership; one Chevrolet Buick GMC store; and two Toyota Scion dealerships.
They were acquired over the last 13 years at the rate of about one per year. “Generally speaking, whenever we are able to put a bunch of cash together we go out looking for the next opportunity,” says Keating.
All are located in Texas. He has been approached about buying outside of the state, but feels most comfortable owning there, says Keating. His is a very horizontally-integrated organization. Keating also owns an advertising agency and an insurance company.
For financing, Keating has used various captives in the past, but for his recent deals as well as floor planning, he has stuck with two main creditors, BB&T bank and Chase bank. He also does some business with Ford Motor Credit Co.
“It gives me a couple of options,” says Keating.
He credits Ford Motor Credit with his ability to purchase his first dealership. But it was a disagreement with his father that led to the acquisition opportunity.
Washing cars and parking them in a straight line
Keating comes from a family of car dealers, but he never wanted to be one himself. His grandfather owned a Ford dealership in Crosby, Tex. and his father owned a Ford dealership in Tomball, Tex. Keating worked there growing up, but chose to go to Texas A&M and study engineering rather than enter the family dealership business.
“It was washing cars and parking them in a straight line and picking up trash” to me, he says.
Then he did an internship at an F&I services company during college, and traveled to a different dealership each week training staff and managers. Keating fell in love with the car business.
He went to work selling Fords for a non-family-owned dealership, then went to work for his dad selling used cars in Tomball. Keating rose to general sales manager, but had a falling out with his conservative father and was fired.
“I was selling Fords faster than I ever had in my life” in 2001 with zero percent financing for sixty months for the first time ever, says Keating.
But the dealership was also taking in a lot of trades and the value of used cars was plummeting, says Keating. That was the source of the conflict. His father thought there would be another crash and fired Keating.
About six months later, Ford approached him to buy a dealership in Port Lavaca, Tex. that had gone broke twice in seven years.
“Nobody wanted to touch it [but] I had nothing to lose,” says Keating.
He borrowed money from his grandfather and bought the store. Three months later, the Dodge Chrysler dealer across the street from the Ford store approached Keating about buying that store. The owner had been Keating’s boss in an earlier time, when Keating worked there as a porter.
Soon, he put together a deal to buy the Chevrolet Buick GMC dealership in Port Lavaca. Keating now owned all the new car dealerships in the small town in South Texas.
His father died in 2003 (the two had reconciled) and Keating’a mother decided to sell the dealership to Ben and two partners who worked at the store, despite his dad’s dictate that if anything should happen to him they should sell. By 2006. Tomball Ford was the number one F-series dealer in the country, says Keating.
Partners are part of Keating’s ownership plan. He owns 80 percent of each store and the general manager is also a part owner. Each store has a CFO-type money manager.
He enjoys making other people dealers, says Keating, and “giving them the opportunity to make a ton of money. “
Keating doesn’t attach his name to the dealerships, which instead are named after their location. That is for advertising reasons, he says. There are only so many words that will fit into a 30 second TV spot or a 60 second radio spot and location is more important than the Keating name, he figures.
“I don’t think people care if they are buying a car from Ben Keating,” he says. “That is an ego thing.”
Actually, however, the Ben Keating name carries a lot of weight in some circles. Keating is a championship race car driver and has won at prestigious venues such as the 24 Hours of Daytona and raced in the 24 hours of LeMans in 2015. He races a Dodge Viper and is the number one Viper dealer in the world.
Keating, 44, has two high-school age children who may or may not want to become car dealers. He has a succession plan, says Keating.
He paid more than he probably should have for the Garlyn Shelton franchises, says Keating. “It was more of a heart strings deal,” says Keating.
Right now he aims to save up a bunch of capital and be ready for the next down turn. Keating figures the car business will be good for the next few years. And he will be busy with the four new franchises in Bryan. He will be building a new facility for each of them over the next four years, says Keating.
It seems unlikely he will be able to wait long before acquiring more dealerships, however. He would love to be able to buy larger groups, says Keating. And if business is good and he has money to spare, dealerships are his preferred investment.
“I have always had the belief of investing in myself and sticking with what I know,” he says. “Rather than having any money in the stock market, I have always wanted to be able to invest in another dealership.”
