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Top MSOs selling out to Big Four consolidators

Tuesday, March 24, 2015 - 06:00
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The composition of the industry’s top MSOs is quickly transforming as more and more are acquired by the Big Four Consolidators according to research conducted by Focus Investment Bankers, a leading investment bank to the industry.  At the beginning of 2014 there were 40 large MSOs with total estimated revenues of about $1.5 billion. The Big Four Consolidators acquired more than $800 million in total revenues during the year.  Almost $700 million came from these Top 40 MSOs.

As the Big Four are accelerating their growth, the remaining large MSOs continue growing as well.  But activity by the Big Four has thinned their ranks and highlighted the growing scarcity of platforms for further acquisitions.  At the beginning of 2015, there are an estimated 25 MSOs remaining in this elite group with approximately $850 million in estimated sales.

The year of the platform acquisition
The most obvious characteristic of the large MSO transactions in 2014 is the platform potential of each one – excepting Sterling.  A platform acquisition is more than just a lot of shops on a map.  The most valuable MSO platforms have serious penetration with multiple shops in a particular region.  They have capable, adaptable management teams that created and are expected to continue to operate these MSOs post acquisition.  In almost every transaction in 2014, the acquirers gained a market leader, deeply engaged with DRP programs as well as the locations to offer insurance friendly solutions across a wider region than almost any competitor.

The Sterling acquisition was the exception.  Its 62 locations were scattered across 15 states without deep penetration in any specific region.  However, in addition to a core of well-aligned managers with common practices and culture, many of the locations provided key leaders, market knowledge and presence in regions where Service King plans to expand.

Large MSO transactions in 2014
Of the top 40 MSOs at the beginning of 2014, fourteen were acquired during the year (not including the Private Equity investments in ABRA and Service King).  These included top MSOs such as Wilburn’s, Joe Hudson’s, Kirmac and Car West, to name but a few of the platform MSOs acquired during the year.  By far the largest of these acquisitions was Sterling (acquired by Service King).

Rank 2014 Largest MSOs Acquirer Date Acquired
1 Sterling Auto Body Service King June 2014
5 Collision Revision Gerber April 2014
6 Wilburn's Auto Body ABRA March 2014
7 Collex Collision Gerber June 2014
8 Joe Hudson's Collision Carousel Capital October 2014
10 Car West Auto Body Service King November 2014
11 Collision Centers of America ABRA April 2014
12 Pohanka Collision Caliber December 2014
14 Craftsman Collision Caliber December 2014
18 Kirmac Collision Service King December 2014
21 Champs Collision Center Gerber September 2014
25 Marco Collision Centers Service King September 2014
26 Collision Authority Service King January 2014
31 True Quality Collision Centers ABRA July 2014
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