MSO Profile: ABRA balances fast growth, high quality

Jan. 1, 2020
ABRA balances fast growth and high quality.
In May, ABRA Auto Body & Glass purchased Precision Collision Auto Body, a 23-location grouping in Washington state. This was ABRA's largest acquisition to date, and its first entry into the northwestern U.S. It was also the latest move in what has been a rapid expansion over the past two years.

But that growth has to be balanced with a continued focus on consistency and quality, says Executive Vice President of Operations Scott Krohn. "Our growth model is not about growth first," says Krohn. "It's about performance first and growth second. How fast can we grow and still be considered one of the best performers in the industry?"

With the Precision purchase, Minneapolis-based ABRA now operates 173 repair centers (about 75 percent of them company owned) in 17 states. The expansion is part of the company's plan to become a truly national brand, fueled by a 2011 recapitalization by Palladium Equity Partners. The company added 27 locations in 2012, and so far in 2013 has snatched up 38 stores through a mix of acquisitions and franchise agreements. Over the past 12 months, the company has expanded its presence in Utah, Illinois, Indiana, Minnesota and Michigan.

"This is a game-changing acquisition for us," ABRA president and CEO Duane Rouse said in a statement announcing the Precision deal. “We have an extremely strong management team, a scalable integration platform, a fantastic brand and extensive expertise and experience in the collision repair industry. Acquiring these repair centers is just one more step in ABRA’s ongoing growth strategy to better serve our customers and insurance partners.”

So far, that strategy seems to be paying off. ABRA's revenues totaled $250 million in 2009. Currently, ABRA's annual revenue run rate, based upon the existing portfolio, is over $500 million.

Process optimization and consistency
"We have worked hard the last few years to build a model that gives us repeatable outcomes," Krohn says. "You need to have real time visibility to the data that helps you run your business. That way, you can see if something is not going in the right direction internally. You can address that quickly before it impacts the customer."

Scott Krohn

Krohn says ABRA's biggest challenge is maintaining consistency across all stores and markets. "You don't just have to train your people, you have to support them and hold them accountable as well," Krohn says. "We've gotten very aggressive with our standard operating procedures (SOPs) in the past few years."

A successful MSO also has to have the infrastructure in place to grow the business and to keep up with changes in manufacturing and repair technologies. "For example, when we do an acquisition, we make sure every store in the organization has resistance welders," Krohn says. "That's critical. We invest in materials carts and parts carts for every job in every store; we upgrade the lighting. We have a great equity partner in Palladium, and they understand the value of investing in the business."

The company has centralized IT, HR and accounting groups, as well as a centralized call center. "The call center has been significant for us," Krohn says. "The call center reaches out on initial assignment to ensure we have quick, efficient customer communication."

Two years ago, the company established a centralized insurance compliance team to ensure continuity, assist with training, and to help develop estimatics to make sure locations are in compliance with their DRP programs. "We look at everything from photo quality and specifications to part usage, and we measure and track all of those things," Krohn says. "We conduct regular audits, and we build training and identify where the opportunities are to improve."

A focus on metrics has helped foster improvements across the company. For example, ABRA has reduced cycle times from 11 days to 7 over the past several years. "When you speed up cycle time, your customer satisfaction tracks right along with it," Krohn says. "The faster you are, the happier your customers are."

Selecting acquisitions
According to Krohn, ABRA evaluates specific metrics for each potential market it enters, as well as the local business culture. "We look at average income, cars per household, average number of accidents, things like that," Krohn says. "There are a few areas with different business standards than what we're used to, so we won't go into those markets right away. But there's a lot of white space where you don't see much presence from the big four MSOs, and those are good places to do business."

As with the Precision deal in the Seattle area, ABRA targets new markets by making a platform acquisition of an existing MSO, then tucks in with single-store buys or greenfield/brownfield locations to expand coverage. One exception was Indianapolis, where ABRA made two, five-store acquisitions that provided nearly complete coverage in that city with no overlap. "That has never happened before," Krohn says.

Somewhat unique is the company's mix of company-owned and franchise locations. "We franchise in secondary markets that are adjacent to our primary corporate markets," Krohn says. "Those are typically smaller cities like Rochester or Duluth, where there's not enough opportunity to scale a corporate market, but where there may be a good independent operator or dealer that wants to excel in the collision repair business. That also helps our insurance carrier partners, because we can provide an alternative in rural areas near those markets."

When evaluating potential acquisitions, Krohn says the company considered businesses that have a culture that can easily align with ABRA's, the shop's reputation and their scale within their market. "We also make sure it's a platform that will allow us to enter the market and then tuck into those peripheral areas," Krohn says.

Bringing shops into the fold When the company closes an acquisition, ABRA staff arrive at the new locations and
install the ABRA IT systems over a weekend. "We then send in a team of trainers that teach existing employees the ABRA system, and we train them on all of the tools we've developed," Krohn says.

That includes ABRA's Mitchell shop management system (Krohn credits the vendor with assisting with training and support). ABRA also developed its own proprietary data warehouse, which allows the company to send data back and forth to both internal stakeholders and to outside partners. "The important thing is to get all that data and boil it down into a few simple key indicators that will help the people in the shops doing the work to get the outcome they are looking for," Krohn says.

While the company's early acquisitions were usually of companies with owners that were planning to leave the market, more recent buys have involved incorporating managers and owners that want to continue with ABRA. "We've implemented a learning management system that incorporates interactive learning modules," Krohn says. "There are e-learning modules that assist with training on the ABRA systems and processes, and that's been one of the biggest game changers for us in the past two years. With remote learning, everything is tracked, so you know who has gone through the training, and how much they've completed."

The same type of transition process takes place at franchise locations. "We give them all the same tools, the same training, and the same IT infrastructure," Krohn says. "We have our franchise operations team at those locations each month doing evaluations, doing training and looking for opportunities to improve the franchise performance."

That focus on performance has helped the company thrive, despite the challenges of an oversaturated body shop market, more complex and expensive repairs and a more complex and demanding insurance industry.

"While there are probably way too many body shops out there, there aren't that many high-performing body shops," Krohn says. "If you get better outcomes, the business will come to you. If you are a high performer, you can take market share."

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