n conversations I have with business owners throughout the industry I often notice a negative view expressed toward the large consolidators, specifically that the large consolidators could never produce the same quality of product or service as a smaller privately held business. While there may be some truth to this (studies looking at franchises have shown that owner operated franchises tend to perform at a higher level relative to corporate owned stores), there is much to be learned from the success of these larger organizations.
In the past few years, these large MSOs have grown at a rate that have left even the most well-informed and well-connected individuals shocked at the pace of industry consolidation. Boyd increased revenues by over $400 million in two short years – doubling in size. The large consolidators have acquired more businesses and integrated them more rapidly than most thought was possible. The large MSOs have developed a core competency in sourcing, acquiring, closing and integrating independent businesses. The result is that these businesses, using the tools of corporate finance, have fundamentally altered the industry and developed a competitive advantage that many small and mid-sized businesses will find difficult to overcome.
I tend to be agnostic about consolidation, neither assigning a “good” or “bad” value judgment and rather looking at what “is”. I am, however, pro-business, and continue to be impressed from a business standpoint by the rapid and profitable growth of these companies. The large consolidators have done an excellent job of building a comprehensive collision repair businessas opposed to a collection of collision repair shops. Continue reading here.
