If it feels like you’re seeing fewer headlines about the “Big 4” consolidators gobbling up other multi-shop operations and single-location shops, that’s not your imagination.
Kicking off the seventh annual “MSO Symposium” during NACE Automechanika in Atlanta this summer, consultant Vince Romans said consolidation of the industry is “slowing” but “has not stopped.”
“Back in 2014, we had almost $1 billion of acquired revenue, business that changed hands in the United States, transferred from smaller operators to the four top MSOs,” Romans said of acquisitions by ABRA Auto Body & Glass, Service King, Caliber Collision and the Boyd Group (which operates in the U.S. under the Gerber Collision & Glass tradename). “You can see the trend downward in 2016, to $210 million, and year-to-date as of the beginning of August, it was about $132 million.”
Romans said those figures include only “platform” acquisitions by the Big 4 of other MSOs, not purchases of single-location shops nor brownfield or greenfield expansions by the largest consolidators.
“Still, these numbers do indicate there’s a slow-down,” Romans said.
The level of acquisition activity isn’t consistent across the Big 4. The two largest chains, Caliber and Gerber, have continued to acquire more businesses than the other two over the last couple of years.
“ABRA, which took some time off, about 15 months to reassess their acquisitions and constructively transform their business, is now back in action,” Romans said. “They’re acquiring single shops, and looking at platform acquisition. On the other hand, Service King has taken a hiatus now. Since the third quarter of last year, Service King had not made any multi-location platform acquisitions. But they are doing some single-location acquisitions, so they’re not completely off the grid.”
Having recently added its 600th location, Caliber is the largest chain, with almost one-third of the 1,813 locations Romans said the Big 4 had as of early August. He estimates that, combined, the four companies had 2017 U.S. sales of about $5.3 billion, or nearly 15 percent of total U.S. collision repair market. That averages out to about $2.93 million in revenue per location.
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By Romans’ count, there are now nearly 100 collision repair businesses in the United States that have annual sales topping $20 million. Combined, those 96 businesses have nearly 2,800 shop locations, he said. They have captured more than one-fourth of the industry’s total revenue; that’s up from less than 10 percent in 2006.
While scale has its benefits, having a large collision repair organization has its challenges as well. Romans said unfilled production positions are common at many MSOs.