For the past few weeks we have been speaking about the options that are available to a collision repair operator: stand pat, grow, or sell.
I spoke at some length about the risks involved in each strategy. Standing pat is a risky strategy due to the concentration of risk into a single business in a single city / region.
Growing is risky because it involves developing a new set of core competencies built around high level financial management as well as acquisition and integration competencies. Most collision repair businesses have not developed these competencies; plus even if they have, they are competing against other large MSO’s with extensive experience sourcing and closing acquisitions.
Selling is similarly risky as there it is almost a certainty that a buyer will have vastly more experience in a business transaction, leaving you and your business vulnerable. Buyers will pay a premium for a well-documented, well-run business but most collision repair businesses have little experience presenting financial information in a usable format to a multi-million dollar institution.
Those are the risks. But I promised an article about opportunities! Given you properly manage the process, there is actually a lot of opportunity to grow “inorganically”, or via acquisition. Industry leaders have proven that it is not only possible, but it is an incredibly lucrative strategy when done correctly. For this reason, private equity groups continue to invest in the industry. Mid-sized MSO’s continue grow via acquisition even if we tend to only hear about the big sales to the consolidators. Continue reading here.
Subscribe to ABRN and receive articles like this every month…absolutely free! Click here to subscribe.
