This year is shaping up to be a record year of private equity in collision repair. Beginning late last year with the Caliber ABRA merger and recapitalization, the industry has renewed interest by private equity investors. These are the trends that are increasing private equity in collision repair.
Successful Caliber ABRA merger and recap
Success breeds success. In 2013 when ONCAP exited the Caliber investment to OMERS for about $425 million, ONCAP generated a 7.5x return on invested capital. Gains like that in a few years grab investors’ attention. When the existing equity holders in Caliber recently recapped and merged ABRA with Caliber at a multiple rumored to exceed 15.0x, similar eye-popping returns were generated but on a much larger absolute dollar figure. For an estimate of Enterprise Value contact me or for precise market share and revenue estimates for leading companies download the 2019 collision repair industry update.
MSOs increasingly seeking private equity rather than exiting to strategic buyers.
Multiple regional MSOs are currently seeking private equity investments, explicitly avoiding a strategic sale to an existing competitor. These MSOs see the potential to continue to scale up, build economies of scale, and leverage the infusion of additional capital to support growth. In today’s investment environment financial buyers (e.g. private equity) are providing bids as competitive, if not more competitive, than the largest MSO buyers.
Traditional holding periods are expiring
The collision industry underwent a wave of investment from 2012 to 2015 and now such investments appear rather long in the tooth. Caliber, Service King, ABRA, Joe Hudson, Driven Brands (parent company of Maaco, Carstar, 1800 Radiator, and others) all transacted in that time period. These investments have reached the end of the traditional private equity holding period.
In our industry update we dive deeper into all these trends, and more. If you have a pending deal you are evaluating the report will give you real time insight from an industry insider that has spent decades in the industry. Purchase of the report includes a Deal Strategy Session where, pending a conflict check, we will identify your particular blind spots as they relate to your investment. You can preview the report and download the first pages for free at https://supplementadvisory.podia.com/collision-repair-market-study-2019