US magazine Autobody News has reported that the number of private equity firms and other investor groups placing their trust on success in the collision industry reached a new peak this past year. The respected online publication made the claims while reporting at the annual MSO Symposium, held on November 3, the day before the SEMA Show opened in Las Vegas.
“There are four new groups that have been funded by private equity (in the past 12 months), and of course there was another one in Canada,” John Walcher of Focus Advisors, a merger and acquisition advisory firm focused on the collision repair industry, said during the event.
“This is the longest list we’ve had since we started publishing this. So despite headwinds, despite a little bit of slowdown, despite some right-sizing [among the largest MSOs], we’re still continuing to see private equity interest.”
Apart from the nearly 4,000 shops operated by the largest four MSOs, the other dozen or so companies with private equity investment operate nearly 500 shops combined, Walcher said. He estimated their combined sales at about US $1.8 billion (AUD $2.76 billion), or about 3.8 per cent market share. This is in addition to the four largest MSOs that combined capture about 33 per cent total market share.
Speaking only about a week after Canada-based Boyd Group’s announcement of its acquisition of Joe Hudson’s Collision Center and its 258 shops, Walcher said the number of merger and acquisitions were “down significantly” this year. He shared data showing 44 new or acquired shops in January by consolidators and mid-sized regional buyers, followed by 72 in February. But the monthly total fell to just 17 in March, and didn’t climb back to above 27 over the next seven months until the Joe Hudson’s acquisition in October.
Walcher said that decline appears to be based on perceptions of the economy.
And it’s not just the US and Canda seeing investor groups and private equity firms backing the industry with a number of organisations in Australia recently gaining capital equity from investment groups, including MotorOne, iBodyshop, National Windscreen Group and Western General Bodyworks.