Focus Advisors has offered some analysis on the recent sale of the 35-location Collision Works MSO to Gerber Collision & Glass, which it feels is illustrative of how large MSOs are creating value for their owners.
Gerber’s acquisition of Collision Works is the largest acquisition of an independent MSO in the last three years. Combined with the acquisition of John Harris Body Shops in South Carolina, Focus Advisors estimates that Gerber has added nearly 10% to its overall revenues with these two large acquisitions. These acquisitions by Gerber reflect the continued strength of large consolidators in growing their businesses.
“It takes a lot of revenue to move the dial on a big enterprise like Gerber,” stated Focus Advisors.
Focus Advisors estimates Collision Works’ revenues in the $100 million range in Oklahoma and Kansas, three fast-growing midwestern markets (Oklahoma City, Kansas City and Tulsa), and a host of smaller adjacent markets. John Harris operated 16 shops with an estimated revenue of $40 million with large and small shops across South Carolina and parts of Georgia.
A Template for Growth
Collision Works Owner Jake Nossaman and his team built a solid foundation, beginning with large, well-located operations in and around the Oklahoma City market. They continued to grow with both greenfield and acquisition strategies. Collision Works entered a second large market, Kansas City, with a greenfield development and proceeded to acquire shops in and around that market. With an eight-shop MSO acquisition (Auto Craft), Collision Works expanded its reach into the Wichita market and continued adding single shops to reach the full complement of 36 shops upon sale to Gerber.
To finance some of its initial growth, Collision Works teamed up with a substantial capital partner – Bank of Oklahoma. In 2019, it refinanced its real estate portfolio to acquire $50 million in additional capital and used these resources to pay down debt, continue buying and integrating shops across their markets.
Exit Strategies
Along the way, Collision Works also looked at the possibility of joining forces with a very large private equity firm, according to Focus Advisors. In the end, because of its scale and infrastructure, Collision Works had multiple exit opportunities – from selling to a consolidator to recapitalizing the company with a large private equity investor to merging with other strong operators.
With few remaining regional MSOs left in the U.S. approaching the size of Collision Works, Focus Advisors expects the scarcity value will allow those remaining operators with more than $50 million in sales to continue to find enthusiastic buyers – or private equity investors.
For rapidly growing regional and super-regional MSOs, scale, infrastructure, relationships with insurers and access to capital will be the primary elements determining future success.
For more information on Focus Advisors, visit focusadvisors.com.
