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Friday, 07 August 2020 21:03

Focus Advisors Releases Midyear Updates on Collision Repair Industry

Written by Chris Lane and David Roberts

Index

Focus Advisors sent an email Aug. 7 to Autobody News reviewing the advisory firm's updates on the collision industry.

"It’s August and we are more than halfway through a most extraordinary year," the email said. "The Great Pause continues. What follows is our midyear update."

 

Operations

 

Average shop revenues are down 25% to 30% across the country, though it varies by region and by the intensity of regional COVID cases. Most shops are slowly returning to higher volumes.

 

The best news---many operators have figured out how to maintain close to normal margins on dramatically reduced revenues. The recession of 2009 taught operators how to both survive and then improve operations while under financial duress. Lessons well-learned then are helping the best operators weather this even more extraordinary downturn.

 

PPP loans have had a universally positive impact for those operators who were successful in their applications. The relaxation of repayment terms has been a positive development. Most loans are expected to be largely forgiven.

 

An interesting side note: anecdotally, most of the MSOs and shops that received PPP loans during the first application period obtained those loans from small and local banks and credit unions. Evidently the big banks focused on their largest customers. During the second application period, more loans were obtained from some of the big banks, but many MSOs not only didn’t get big bank loans, but some never even heard back after their inquiries.

 

M&A Activity

 

The current level of mergers and acquisition activity keeps surprising us. Not surprisingly, the top two national consolidators continue to make offers and acquire independent shops and MSOs. 

 

But private equity firms have really stepped up their interest and investments. Five super regional MSOs are also in acquisition mode. Add to these numbers several dozen sub-regional MSOs that are continuing to make acquisitions largely using internal capital sources. Finally, Driven Brands now owns a nine-shop MSO and is pursuing more acquisitions. 


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