MSO Acquisitions Slowed Considerably in First Half of 2022 by David Roberts and Madeleine Roberts, Focus Advisors
The first six months of 2022 have been an unusually slow period for acquisitions by most of the consolidators. Aside from catching their collective breaths after a frenetic wave of closings at the end of last year, there isn’t a single explanation for the slow down but general industry conditions experienced by every operator have put more of a focus on current production rather than future growth. Extreme parts shortages resulting in significantly longer cycle times, an even more severe shortage of qualified technicians to do the work, and the increasing imbalance between insurance reimbursement rates and operator costs, have left every organization scrambling, improvising and struggling to meet current demand. Consolidators COVID has not slowed Caliber down. With more than 130 acquisi-
tions and 72 brownfield and greenfield openings in the same period, Caliber grew more than 200 locations in the first six months of 2022. The company continues to shift its expansion focus to greenfield and brownfield openings. Of their total expansion efforts during 2022, we expect more than half will be acquisitions. Gerber (Boyd Services Group) slowed its pace fairly dramatically in the first half, with fewer than 14 new locations, compared with a whopping 48 in the first half of 2021. Combined with disappointing financial performance that impacted the share price of Boyd Services Group, Gerber has moved more cautiously in 2022. Service King—The recap by Clearlake Capital Service King opened two greenfield locations—one in the Chicago area and the other in San Antonio—but otherwise made no new acquisitions. The continuing saga of Service King’s financial problems has finally been brought to an end—or at least an intermediate conclusion. Under
the terms of a deal announced in June, Service King will receive $200 million in new capital and reduce its debt by over $500 million while extending its remaining existing funded debt maturities until June 2027. When the deal is completed, the full equity and debt positions of the parties will be more visible, but the new control entity is clearly Clearlake. Hold the presses—Crash Champions is merging with Service King. The deal is scheduled to close at the beginning of August with Clearlake Capital Group as the investor. Service King’s 336 locations will combine with 225 Crash Champions locations. Their combined footprint of shops will establish strong market shares in Texas, the Pacific Northwest, Florida, Washington, D.C., Philadelphia and Chicago, forming the third largest U.S. consolidator. We will publish a separate and extensive report with more details and analysis of the transaction. Biggest transactions Crash Champions has continued its
breakneck pace of acquisitions with the recently announced acquisition of Mike’s Auto Body, one of the largest remaining independent MSOs in the U.S. With 17 locations in SF Bay Area, Mike’s Auto Body is a key platform for Crash’s continuing penetration of the California market. This acquisition followed more than 30 transactions by Crash in the first six months of the year. As of June 30, Crash appeared to be operating more than 203 shops. In another notable transaction early in 2022, Mahnke Auto Body with its eight locations in Colorado joined Kaizen Collision, which now operates 15 locations in that state. CEO Sam Mahnke has been announced as the regional operating executive. Kaizen continues its rapid expansion with a technician-centric approach to operations. Its total shop count at June’s end was 51 shops. Classic Collision Classic continued its steady growth with an additional 16 shops in the first half including Pro Quality
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