3 Reasons MSO’s Know Exactly What Your Business is Worth

A colleague of mine was recently approached by one of the Big 4 inquiring about his business. After a few brief conversations around his financials they came back to him and offered him a very specific number to buy his business.

He remarked to me, “They knew more about my business and what it was worth than I did. I had no idea.”

Ask 5 business brokers what your business is worth and you’ll get 5 responses. Ask 5 investment bankers and you will get 25 responses.

How do the MSO’s know exactly what your business is worth? How do you value a business?

There are three common ways I see collision businesses valued: by discounted cash flow (DCF), the multiple method, or by asset value.

Let’s break each one down. […]

Why You Should Not Make All the Money (Just a lot of it)

I wanted to take a break from talking about finance and the collision industry and spend a bit of time discussing the importance of employee alignment and engagement.

Normally we talk about growth and how to finance and account for that growth. But what gets lost in that narrative is that growth is impossible without a group of people working towards a common goal.

In corporate management speak, that is called “employee alignment”.

What is employee alignment? In its shortest form, alignment is about getting employees to think like owners. […]

You won’t believe how much money Caliber made last year.

Previously we spoke a bit about maximizing enterprise value vs. maximizing profit margins.

Many people in business fail to realize the distinction between the two concepts. If you maximize profitability, you maximize the value of your business, right?

Not always. In business everything is always a trade off. […]

How Private Equity Makes Millions in the Collision Industry

We’ve talked a bit about the state of the industry and the Big 4, or the Big Boys as I sometimes call them (Boyd/Gerber, Caliber, Service King, ABRA). While they may be in the same business of fixing cars, the way they do things is systematically different.

(Editor’s Note: Keep an eye out for our upcoming article on the role of franchise based MSO’s and their impact on the industry.)

Perhaps the least understood difference is at the core of their business – how they actually make money for their shareholders.

Some people believe they give heavy discounts and make it up in volume. Others believe they don’t actually make money, and are barely holding on.

The reality is that these businesses are making millions upon millions of dollars. But not the way you may realize. […]