See Crash Champions to Merge

While still smaller than Gerber and far behind Caliber, this new entity will be competing coast to coast with its two larger national competitors, as well as six smaller super-regional MSOs.

For much of the last six months, Crash’s investment bank was circulating an extensive investment memorandum, seeking a new private equity sponsor. During the same period, the investors in Service King were looking for a resolution to its deteriorating financial performance. Clearlake Capital acquired a control position in the Service King bonds. This position allowed them to negotiate a debt conversion to new equity and an extension of other debt obligations. In addition, Clearlake injected a reported $200 million in cash.

Crash was looking for capital to continue its rapid growth. Clearlake was looking for a partner to help manage a billion dollar investment in collision repair. The resulting merger is a combination of a deep pocketed capital sponsor, extensive management team, geographic penetration and scale that now rivals its two biggest competitors.

Crash Champions has gained a major influx of assets and probably some cash as well. We don’t know exactly what the combined balance sheet will look like, but total debt to capital will be much more reasonable for the combined companies. We would expect Crash’s acquisition program would be more subdued for a period as it integrates the Service King shops.

However, given the success of their program in the last three years, there is probably a substantial pipeline of commitments that will be completed. And the deep pockets of Clearlake will likely allow Crash to contemplate many, as well as larger, transactions.

Among the benefits of the merger are a huge increase in revenues and scale, complementary footprints, improved negotiating power with insurance companies, improved purchasing and spreading overhead.

The challenges will be integration, technician retention and merging management teams.

Crash Champions has been building out across the country in multiple attractive markets---Southern and Northern California, Florida, Colorado, Chicago, Wisconsin, Washington, D.C., and Philadelphia.

Service King had an enviable footprint across the West, Southwest, Texas and Chicago.

The two firms overlapped in some markets where neither was dominant. The combined numbers in these markets are considerably more scalable and efficient. In other markets, each had considerable scale without duplicating the other’s positions.

With the merger, Crash enters 12 new states and several of the fastest growing metropolitan areas around the country.

Texas is the grand prize, with 96 locations in a state where Caliber dominates and Gerber is a weak third player. The original Service King locations owned by Eddie Lennox are the core operations in the best performing region for Service King.

Crash already has a very strong position in Northern California with the acquisition of Mike’s Auto Body. With the addition of Service King’s South Bay and Sacramento shops, it is a strong No. 2 to Caliber.

The combination of Crash’s 30 shops in Southern California with 25 of Service King gives them a stronger footprint in the nation’s largest market. However, even the combination of these two still leaves them a very distant second to Caliber.

While 37 total shops is modest, the coverage across the Washington, D.C., and Philadelphia region is highly credible.

Combined operations in Florida with 47 shops improves their penetration in that market.

Source: Focus Advisors

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Autobody News

Elon Musk Confirms Tesla Cybertruck Design Finalized

by Andrei Nedelea, InsideEVs

Even though at first glance the Tesla Cybertruck most recently spotted looks almost identical to the original prototype/concept shown in November 2019, the electric truck has undergone some changes.

However, no additional big changes are coming, according to CEO Elon Musk, who announced in an interview the Cybertruck’s design was “finally locked.”

The most notable changes we observed over the last year or so are the new windscreen wipers— no,they’re not lasers, but theymay extend somehow, since in the latest photos they look too short for the massive windscreen—the addition of rear-wheel steering, the appearance of production spec side mirrors and the disappearance of physical door handles, which the concept had.

We recently also got a peek inside the Cybertruck at what appeared to be the final design of the dashboard, which features a similar setup to the Tesla Model S and Model X, with a driver’s display complimenting the big central infotainment screen. The Cybertruck dash looks a lot like a Model S/X, but instead of rounded flowing shapes, Tesla made everything angular to match the exterior.

During the Tesla Owners Silicon Valley interview where he made many other announcements, Musk said Tesla’s focus is now to try to finally start building the truck. However, he said no matter how hard the automaker will try, it will not be able to make up for the lack of semiconductors now plaguing the industry.

This is why he estimates even though the Cybertruck’s design won’t be changed any more, so they can start preparing and tooling up for production at the Texas Gigafactory, its actual start of production is still 12 months away. And that’s just Musk’s estimate right now, which doesn’t take into account any additional hitch they may encounter on the road to production.

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