fbpx

John Yoswick

John YoswickJohn Yoswick is a freelance automotive writer based in Portland, Oregon, who has been writing about the collision industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com).


He can be contacted at john@crashnetwork.com 

Wednesday, 03 February 2021 21:42

Forecast: Expect More Private Equity Coming Into the Industry

Written by
Neal Sahney and Jonathan Seiffer, representatives of two private equity firms, said investors like the stability and scale opportunities they see in collision repair. Neal Sahney and Jonathan Seiffer, representatives of two private equity firms, said investors like the stability and scale opportunities they see in collision repair.

Index

Share This:

 

During the MSO Symposium in November, industry consultant Vincent Romans said there are a dozen private equity firms with investments in U.S. collision repair organizations, including Caliber, Gerber, Service King, Crash Champions and Classic Collision.

“Just a decade ago, there was one, when ONCAP acquired Caliber,” Romans said.

 

Collision repair businesses with private equity investments currently produce about $10.9 billion of revenue, or more than 28% of the total market, according to Romans, who foresees more investment in the industry forthcoming.

 

“I believe that we will see at least two or three more private equity firms settling down with investments in MSOs within the U.S. in the next six months,” Romans said.

 

Neal Sahney is a principal at one such company, Frontenac Company, a Chicago-based private equity firm looking to invest in the collision repair sector for the first time.

 

During an MSO Symposium panel discussion, Sahney said three things make the industry appealing to investors.

 

First, it’s “a highly stable space,” he said, less influenced than other industries by economic shifts, and with insurance reducing some of the “risks related to being paid.”

 

Second, though MSOs now have significant market share, “this is still a really fragmented market relative to many others” where consolidation has played out more, Sahney said.

 

Lastly, he said, “Scale presents a real advantage in this space,” given the investment needed because of vehicle technology, and the requirements of direct repair programs and OEM certifications.

 

“The players who continue to generate scale will have a real advantage over the smaller players,” Sahney predicts.

 

Another panelist, Jonathan Seiffer of Leonard Green and Partners, a private equity firm invested in Caliber, said scale can also help address the long-standing human resources challenge in the industry in that “people can find advantages and security working for larger organizations.”

 

Seiffer and Sahney, speaking a month before the first COVID-19 vaccine had received Food and Drug Administration approval, said the pandemic and its impact on...


Previous Page Continue reading »