FOCUS Advisors (focusadvisors.com), an independent investment banking practice, has been launched by Managing Director David Roberts, the leading collision industry M&A advisor. FOCUS advises collision industry entrepreneurs seeking capital, partners or representation in a M&A transaction.
“Change is accelerating. In just the last 12 months we’ve seen Caliber and ABRA merge, Joe Hudson’s gain an aggressive private equity investor, and over 20 percent of the 10 largest remaining MSOs acquired,” states Roberts. “The distance between the consolidators and regional MSOs versus the rest of the industry is widening. Top tier providers are gaining better access to insurance referrals, leveraging their infrastructure and raising outside capital while smaller MSOs and individual shops are facing increasing challenges. For many MSOs that are sitting on the fence, their decisions come down to two questions. Do I invest and get bigger? Or do I take my chips off the table and go on to the next phase of my life? FOCUS is organized to help them make their best decision and then guide them through the process.”
Market intelligence and capacity are two keys to successful representation. Roberts and his six-person team of bankers, data analysts and project managers enable the firm to advise clients on a variety of industry issues as well as manage multiple transactions simultaneously. “We’ve invested more than $500,000 in developing some of the best data about shops, MSOs and consolidators.”
FOCUS’ proprietary access to the actual transaction values, terms and conditions helps its clients level the playing field with acquirers. “Selling their MSO or shop is the single most important financial transaction most of our clients ever have to make,” Roberts notes. “Most sellers don’t want to go into a transaction against the consolidators and regional MSOs without someone by their side who’s been down the same road many times before.” The FOCUS team helps clients prepare their business, identifies and engages potential investors or bidders, structures the deal to meet their needs, and anticipates the surprises to execute transactions as smoothly and predictably as possible.
Roberts spoke exclusively to ABRN about FOCUS Advisors.
What is the biggest pitfall you see shops make when selling their business without the help of an expert?
Roberts: Trying to save money by going it alone or with just their attorney. Without an advisor, sellers are at a serious disadvantage – not because they aren’t smart and not because they aren’t good negotiators, but because there is an asymmetry of information and experience – and time. Because the buyer has done dozens of deals, they know far more about just about everything in an acquisition — from current values to acceptable lease terms to how WIP is calculated, to how paint loan forgiveness may work, etc. Selling a collision shop or MSO requires lots of time, specific knowledge of current values, terms and conditions and a track record of getting deals closed. The advisor brings all of that and more to the table. This helps equalize the power in the deal.
What are your predictions for the market in terms of consolidation over the next 5 years?
Roberts: The consolidators will get even larger and more dominant. Eight to 10 regional players will grow into $500 million+ organizations. A rapidly increasing number of single shops and MSOs will join the franchisors who will increasingly gain market share. The number of single shops will continue to decline more rapidly. Those that remain will hold their own through specialization, relationships with dealers and in third-tier markets where consolidators have less interest.
Why is now a great time for shop owners to consider selling their businesses?
Roberts: The best time to sell is when there are multiple buyers who have the capital to make acquisitions. Those who sold three years ago did very well. Today the values are not as high, but there are still many opportunities to sell. New capital has entered the industry this year. Strong regional players like Joe Hudson, ProCare and others are ramping up their acquisitions. Service King is becoming more active while Gerber and Caliber have continued to make acquisitions, although they are opening an increasing number of brownfield and greenfield shops.
Many owners are still expanding, improving their EBITDA and gaining new DRPs. Some are reluctant to sell because they are making more money than ever before. We advise clients to sell when they are ready. But we remind them that it's always better to sell when the wind is at your back, when things are improving, rather than when you are on a downturn.
About FOCUS Advisors and David Roberts:
FOCUS Advisors (focusadvisors.com) is a full-service FINRA-registered M&A advisory firm serving collision industry entrepreneurs looking for advice about growth and sale options, representing them in raising capital or selling their businesses. With more than 20 collision industry transactions in the last 5 years including recent sales of large MSOs such as Price’s Collision in Nashville and Herb’s Body and Paint in Dallas, David Roberts is the industry’s leading advisor to MSOs and single shops. As the co-founder, Chairman and Chief Development Officer, he helped Caliber raise more than $120 million in capital and acquire 37 shops before its sale in 2008.