Spurred by dramatic growth of large consolidators, as well as many regional and local MSOs, consolidation continues to evolve and impact the collision repair industry. Let's take a look at the numbers on acquisitions, valuations and markets.
|Want more ? Enjoy a free subscription to ABRN magazine to get the latest news in collision repair. Click here to start you subscription today.|
Ownership in Transition In the past 24 months, nearly $3 billion of sales volume in the Collision Repair industry has changed ownership – that’s 10% of the entire industry! The industry transition has not been limited to one type of buyer or seller; there have been a wide range of buyers and sellers involved. Consolidators have sold to large private equity firms, large family–owned businesses with 50-year histories have sold to strategic buyers, and a variety of large and medium size MSOs have been acquiring smaller players in hopes of creating attractive platforms for their own growth. This wave of acquisitions is dramatically changing the face of the industry.
In the first five months of 2014, the 4 top consolidators have acquired or opened 163 shops, including Boyd's recent purchase of Collex. This is on top of 179 shops acquired or opened in all of 2013.
Why this sudden acceleration? Bigger deals, rising prices and uncertainty about the future have combined to spotlight how consolidation is accelerating. But why now?
- Capital is cheap, especially for the consolidators. With Carlyle’s and OMER’s extraordinarily deep pockets, Gerber’s access to the public markets, and ABRA’s ability to attract additional investment seemingly at will, acquisition capital has been widely available at very attractive rates.
- Plenty of targets are available. There are more than 44 MSOs with $20 million or more in revenues with another 110 between $10 and 20 million. Many of their owners are taking advantage of the opportunity to realize a liquidity opportunity that may never present itself again in their lifetime.
- Insurers are rewarding size with volume. Large insurers have increasingly rewarded the best performing consolidators and large MSOs with more volume. Cars are repaired faster, with less hassle, and more predictable costs and quality. Customers are satisfied and score consolidators and larger MSOs well on almost every measurement of satisfaction over industry averages.
- Scale has rewards. For large operators, the increased volumes enable them to increase their margins, their total EBITDA and continue to make the investments that improve their performance for insurers. And as they improve, insurers send them more volume.
Consolidation rewards large consolidators and MSOs, investors, insurers and their customers.