I’m writing this on my way back from Vancouver, Canada. I spent the past few days on site with a client focused on developing administrative SOPs to drive consistency in financial reporting. Then a quick meeting with an investment bank involved in the industry. I even took a sea plane over the harbor and got[…]
I spent last week at NACE in Anaheim California. For those of you unfamiliar with NACE, it is the only US industry trade show dedicated to the collision repair industry. In the past I have done video updates from the floor during the week, but this year I was so busy that I just couldn’t find[…]
There is a trend I have begun to notice recently. The Canadians dominate the collision repair world. Dominate may be a bit of an overstretch, but Canadian firms own, operate or control some of the biggest names in the industry. Canadians also have more analysts covering the collision repair sector than any other country. Quick personal[…]
An interesting thing happened in the North American collision repair market. While the four largest collision repairers have for some time stopped announcing even the largest recent acquisitions, the pace of consolidation has continued at a rabid pace. Since the beginning of 2012, the four largest operators have more than tripled the number of locations[…]
I’m back from Barcelona, having presented at IBIS (International Bodyshop Industry Symposium) on consolidation trends. IBIS is one of the marquee organizations, the only I know of that looks at the collision industry globally. It was a true honor to get in front of this group. So many fascinating presentations – email me to discuss[…]
Consolidation in the collision industry continues to march forward at an astounding pace. The largest companies in the industry continue to aggressively grow through acquisitions, or by buying existing collision repair operators. And as these companies continue to aggressively expand we see continued consolidation in adjacent segments that sell into the industry, especially in paint[…]
The last four full weeks of the year are upon us. Only 33 days full working days left this year (or less depending on your holiday schedule). I hate to be the bearer of bad news, but if you have not already started to set your business plans in place for 2016 you are behind[…]
Consolidation has been going on in the industry in the U.S. since the 90s. There have been some major successes as well as some spectacular failures. The collision industry, and the entire automotive industry in general, is not the first industry to ever undergo consolidation. And it certainly will not be the last.
Consolidation has taken place for nearly two decades now. Nearly every current business owner in the collision industry “lived through” the first round of consolidation. Because of this “survivor bias” some feel that the current round of consolidation is destined to fail the way they believe the prior round did. […]
The industry is consolidating. That statement probably comes as little surprise. The entire automotive aftermarket is consolidating. Dealers, tire vendors, parts distributors, paint distributors, software providers are all consolidating. But were you aware that industries tend to follow a predictable path of consolidation, referred to as the consolidation curve?
Big companies are acquiring smaller companies using affordable capital to grow. This growth creates economies of scale. And economies of scale allow larger companies to provide goods and services relatively more efficiently and at a lower cost than their smaller competitors.
Consolidation will continue because it is a virtuous cycle where success attracts additional investment that generates further business advantage. A growing consolidator will continue to acquire for two main reasons. […]
According to some, 2015 has been a slow year for collision industry consolidation. Of course, 2014 was a landmark year for consolidation. So far in 2015 consolidation has continued, but at a slightly slower pace. With only 12 full weeks left until the end of the year, […]
Private equity firms are very active in the collision repair market, and the automotive aftermarket in general. The rapid growth of the large consolidators has resulted in very attractive investment returns for these groups, further increasing the interest of other private equity investors hoping to invest in the industry. Of the “Big Four” consolidators, ABRA, Caliber, and Service King are all majority owned by global private equity groups. Boyd is publicly traded and not private equity backed, but the President of a Canadian private equity firm sits on Boyd’s board of trustees. CARSTAR also is backed by private equity, as is MAACO. Fix Auto recently received debt funding from a large Canadian investment fund that is active in private company investments. Kadel’s, the Pacific Northwest MSO recently acquired by ABRA, was backed by a smaller private equity group. Joe Hudson’s in the Southeast recently brought on a private equity partner as well. Yet for as active as private equity groups are in the industry, these groups are not well understood. […]
Long time readers of my posts notice two main themes running through my writings. The first is a focus on corporate finance and how to apply those topics to a collision repair business to better manage a business. The second is a focus on M&A (Mergers and Acquisitions) and how to be prepared to buy or sell a business.
Many readers inherently see the logic of the first topic. Understanding the tools mid to large sized business use to manage their business allows the reader to better manage their business, and be more successful as a result.
The second topic is sometimes met with less clarity. It often begs the question: why so much talk about buying and selling a business? […]
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. […]
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. […]
It’s all about profits, right? You can’t survive in this industry unless you mercilessly watch your profit margins. Parts margin, paint margin, labor margin, gross profit margin, overhead expenses, the list goes on and on.
But what if I told you that the big boys don’t care about their margins? […]
In case you’ve been living under a rock for the past two years here’s a news flash – the industry is rapidly consolidating. Wall Street has arrived and they’re taking no prisoners. But what does that mean?
First it means that there are the “Big 4” – Caliber, ABRA, Service King, and Boyd/Gerber. You’ve probably heard of at least one of these guys, if not all of them.
They have hundreds of locations. They do hundreds of millions of dollars in sales a year. They are tied in with major insurance companies in a way you or I never will be. They’re financially backed by some of the largest most powerful financial institutions in the U.S. and Canada. […]