CARSTAR CEO Addresses Sale to Roark Capital

CARSTAR CEO Addresses Sale to Roark Capital Portfolio Company

David Byers says CARSTAR will remain a wholly owned subsidiary and a separate brand and it will be “business as usual.”

carstar
CARSTAR CEO David Byers

CARSTAR announced big news on Oct. 22nd  when it said it had been acquired by Roark Capital Portfolio Company Driven Brands, owners of MAACO, Meineke Car Care Centers, 1-800 Radiator and other automotive companies.

Body Shop Business interviewed CARSTAR CEO David Byers to get his thoughts on what the acquisition means for CARSTAR and how it might shape its future.

Body Shop Business: Does this acquisition represent a shift toward more of a focus on collision, or will Driven Brands continue to focus on maintenance and repair as well?

Byers: I can only answer that from CARSTAR’s perspective, that we will continue to be operated as a wholly owned subsidiary and be managed as a separate brand. I think Roark and Driven are committed to continuing to build the CARSTAR brand as the premier owner-operated brand in the collision repair space, and I think we’re dedicated to providing superior KPIs and customer service.

The three words we’re using in this environment is “business as usual.” This allows us to continue to be what we believe is the best owner-operated brand in the space providing superior KPIs, but now having access to significant additional resources we didn’t have before, both human capital and financial capital, from both Roark and Driven.

BSB: Does access to additional capital mean CARSTAR will aim to accelerate its growth?

Byers: We absolutely believe that. We have been fortunate in that we’re reporting record revenues again this year and significant same-store sales growth that’s significantly outpacing the industry, and our hope is that these additional resources will only help us further accelerate that growth.

BSB: Please expand more on the additional capital resources you’ll have.

Byers: Resources can take a number of different forms. There certainly would be additional financial resources available from Roark or Driven to support our growth. Those could take the form of additional capital investment for infrastructure, employee development, whatever. We’re looking at a whole host of initiatives for growth, and we haven’t historically had the funding to fund all of them, so this gives us the opportunity to prioritize those growth initiatives and then go to our new owners and say, ‘Are you willing to invest X capital to help us grow in this particular area?’ That’s something we haven’t had access to up until now.

BSB: Does this acquisition mean that another mega consolidator in the collision market could be on Roark’s radar?

Byers: Anything is possible. We’re already the largest MSO in North America by store count, and putting us into Roark and Driven gives us even more power in terms of scale and ability to create economies of scale and buy products and services in the industry. This will allow us to do purchasing in a way we’ve never done before simply because of the massive scale we’ll now have. I think we’ll certainly look for other opportunities down the road that will allow us to expand the brand, whether those are acquisition strategies or simply other ways for us to grow organically within our current business.

BSB: CARSTAR has its systems, and Maaco has theirs. Will there be any crossover?

Byers: I wouldn’t view this as Maaco specifically. You have to look at the whole portfolio of Roark brands. They’re the largest aggregator of multi-unit consumer service franchises in the U.S. today, so our ability to share best-of-class practices with all of the Roark and Driven Brands is a great opportunity for us and them. So we look at this as giving us a lot more resources and opportunity to share best practices across all kinds of brands. Maaco only happens to be one brand within dozens of different brands represented by [Roark and Driven Brands].

BSB: CARSTAR is its own brand, and Maaco is its own brand. After this acquisition, do you feel people will view them as the same?

Byers: CARSTAR is going to continue to be operated as a wholly owned subsidiary and separate brand. There is no intention to migrate any of the Driven Brands together, Maaco or otherwise. These brands will be managed independently just like many holding companies across many industries today. There are multiple brands that serve multiple target markets. We have a very defined, very specific target market we serve, and I think Maaco has a defined, specific target market they serve. Those are both big target audiences, and there is more than enough space within the Driven portfolio for multiple automotive aftermarket brands to compete.

BSB: What is CARSTAR’s strength, and what is Driven Brands’ strength? And how will they complement each other?

Byers: I think CARSTAR has multiple strengths, but if you’re asking me to pick one, I would say it’s our ability to deliver the best customer satisfaction service in the industry today as measured by NPS scores. And the reason we deliver the best customer service is that we’re an owner-operated network and our owner operators are always going to care more about the customer. If you look at Driven and say, ‘What do they bring to the table,’ they as a company have multiple different brands they can support across multiple different aspects of the automotive aftermarket industry. The biggest single advantage they have is drawing from that scale of having all those businesses and brands and aggregated purchasing power that we as an individual CARSTAR brand – as large as we are –  would not have access to on our own.

BSB: What do you think insurance companies’ perspective on this transaction will be?

Byers: I think they’re so used to the large MSOs being bought and sold by various private equity firms, sometimes multiple times in the course of several years, that they will think this is a normal course of business in the industry today. From the carriers’ perspective, I think we have a very solid reputation for being a leader in customer service and KPIs, and I think their perspective will be if additional resources, by being part of Roark and Driven, allows you to accelerate KPI delivery and customer service delivery even more, then all the better for them.

BSB: Have you fielded any questions from CARSTAR franchisees on the acquisition?

Byers: Yes. The biggest question has been, ‘What impact will this have on me as a franchise?’ Our answer has been, ‘None.’ We continue business as usual, we will continue as a stand-alone brand, and this acquisition has no impact on our existing franchise contracts or operations.

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