Observations on Collision Works sale to Gerber

Sept. 1, 2021

In industry update, Focus Advisors Managing Director David Roberts says sale illustrates how large MSOs are creating value for their owners

David Roberts

Related To: Focus Advisors

We occasionally share our observations about events and developments in the collision repair industry. We think the recent sale of Collision Works to Gerber is illustrative of how large MSOs are creating value for their owners. - David Roberts

Gerber’s recent acquisition of Collision Works (CW) 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, we estimate Gerber has added nearly 10% to its overall revenues with these two large acquisitions. These two acquisitions by Gerber reflects 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.

We estimate Collision Works’ revenues in the $100 million range in Oklahoma and Kansas, three fast-growing Midwestern markets (Oklahoma City, Kansas City, and Tulsa, Oklahoma), 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.

Growth of Collision Works is a template for other rapidly growing MSOs

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. CW 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), CW expanded its reach into the Wichita market and continued adding single shops to reach the full complement of 36 shops upon its sale to Gerber.

To finance some of its initial growth, CW 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 and 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. 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, we expect 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.

About the Author

David Roberts | Managing Director, FOCUS Investment Banking LLC

David Roberts is the founder and managing director of M&A advisor Focus Advisors. He is best known for co-founding Caliber Collision Centers with his partner Matthew Ohrnstein in 1997, envisioning a more collaborative repair process across insurance companies, insureds, and repairers. After raising the first private equity capital in the industry, David and his partner began buying, rationalizing, and systematizing collision repair shops into the nation’s first consolidated, performance-based MSO. By the time of its sale in 2008, Caliber was the world’s largest collision repair consolidator, a position it continues to hold today with more than $8 billion in sales.

After leading dozens of acquisitions for Caliber, David saw an opportunity to help other MSO owners achieve superior results in growing and selling their businesses. He founded Focus Advisors Automotive M&A with a proven method to help them grow, thrive, and prepare for a strategic exit. Over the past ten years, David has led $500 million in 35 separate automotive transactions. Today, Focus Advisors, a FINRA-registered investment bank, has grown to include a team of eight professionals, all committed to the same mission of helping MSO owners realize the full value of what they’ve worked so hard to build.

Focus Advisors has invested in creating a comprehensive and proprietary database of the entire collision repair industry including the largest consolidators, private equity investors, more than 800 MSOs and 25,000 single shops, including dealers. The firm also tracks transaction values from large MSOs to single shops and everything in between which allows them to provide the best informed valuation advice to its many clients.

David received his B.A. from Duke University and his MBA and J.D. from University of California, Berkeley. He is married to Gail Simpson. Together, they have two daughters and a new grandson!