Imagine a town, a place, two prominent shop owners, each established, well-known. One is straight edge collision, exclusively bodies worked after a crash. The other does heavy duty alongside mechanical. The region’s grown competitive of late, and they decide to combine energy and efforts for enhanced effects.
That’s the Focus Advisors and Veritas Advisors merger, with Focus as surviving entity. Focus founder David Roberts will welcome Veritas head John Walcher, who joins as an executive vice president and managing director, with equity.
The two companies work in mergers and acquisitions, mainly in their respective areas: Focus Advisors being the former in the example above, and Veritas Advisors active as agent in the latter. The two companies have 15 to 20 years of work backing their play and north of 120 deals between them in that time.
Focus represents sellers: owners looking to cash out. Veritas also does sell-side, but has done buy-side consulting too.
Focus President Chris Lane said the combination coalesces three areas of focus for Focus:
• New markets, bringing Veritas M&A in heavy duty and mechanical into the Focus fold of body shop buys
• Growth advisory, a newer area for Focus Advisors, and something of a hybrid between sell-side and buy-side work
• Capital solutions, alternatives to selling, a creative, complicated option for business needs or owner plans
But wait. As ever, there’s more.
“It’s more capability, but that’s not why we did this. John has incredible experience and integrity,” said Lane, a managing partner at Focus. “Together we’re stronger.”
Bigger Fish, Same Pond
Chris Lane.
A current “slowdown” is convenient as buzzword, but it’s not like we don’t go to work. The “global” for now, but not the “local” — not a long-term watchword, because the business is so main street.
Fewer repairs, because tariffs and premiums and uncertainty; fewer acquisitions, because buyers know what’s available, have kicked the tires and are resting their legs, and consolidation moves in phases, adjusts its speed. But it’s individual to each MSO or shop.
It’s a good time for a tie-up.
“I’d like to say we were much stronger on sell-side collision,” Lane said. “John is more diversified, stronger in mechanical.”
Walcher would do collision, but mostly it was “automotive mechanical service, heavy duty, and some other markets. He also has buy-side, helping companies grow and evaluate targets,” Lane added.
That hits the clear first area: Focus Advisors now has the juice to sell just about anything in town: that is, in auto repair.
“Collision is further along in consolidation,” Lane said. “It’s easier because you have a third-party payer. If you’re an investor, you know people are going to keep driving, cars are becoming more complicated — and insurance is going to pay.”
Mechanical is a thrice-bigger market, he said, but tougher to sell. “You’re marketing yourself heavily, coupons, loaner vehicles, advertising, and all this is on your dime.”
For sell-side — understand the owner, create a package to market the shop, run the bidding, close the deal. Lane has personally closed 26 in five years, and just one mechanical, he said. Now Focus Advisors can grow that.
It’s Complicated, and Coming to Maturing Markets Near You
Of newer note are the second two: growth advising and quirky funding. Focus here aims to be a kind of collision center consigliere, a mechanical shop mentor.
Applying the combined experience is swell, but even with the two companies’ heft, an average annum sees six or so sales. Focus half again above that, Veritas about halfway below, Lane said, with 11 sell-side clients at the moment.
As operations recover, Focus figures it can serve shops as advisors: “How do you effectively work,” Lane said. And while buy-sell stays stable or static because buyers know what’s out there right now, Focus will have placed itself as coach-confidant when more owners are ready to exit — in part flowing from their counsel. Meantime they can facilitate sometimes complex middle-stage funding for growing MSOs.
This is “more complicated capital solutions,” Lane said, with the merged Focus offering “more resources, more senior people to address your complicated needs.”
Suppose operators with a dozen or so sites. “They don’t want to be a minority owner [at a consolidator] and debt is too expensive and takes too long,” Lane said. A solve might be mezzanine which, “though more expensive than debt [and] costs a little more equity, [is also] flexible and released in tranches. You grow rapidly.”
For clientele and expertise, Focus Advisors taps its deep bench in collision, Veritas for buy-side and new territories.
“Our goal is to hitch our wagon to entrepreneurs,” Lane said.
‘Everyone’s Going to Transact’
“We’ll help owners grow and do what they want to do: operational opportunities to grow organically,” Lane said.
“We could’ve done it on our own, but we were thrilled” to get Walcher, he said. “Our No. 2 competitor in collision was Veritas.”
Say “both” is better than “each,” and it gets you near. Lane said it that way. Before the link-up, “you would have to choose between Focus Advisors or Veritas Advisors,” he wrote in an email. “Now you get both.”
So together, it’s all of the above. Mechanical repair in car complexity also adds higher-margin diagnostic and calibration numbers and intelligence, and heavy duty gets Focus Advisors insight into fleet service, Lane told Autobody News. Then compute if you can its specialized market and financial intelligence and data, according to Lane: market maps, where consolidation comes, what elements attract which buyers, and if offers are high enough.
“We have the platform in collision repair,” he said, and “we’re going to develop it” in the new Veritas markets.
“We’re helping clients anticipate [and] adapt to the … entire automotive aftermarket,” David Roberts said in a press release, “expanding our ability to serve … clients with unparalleled insight, reach and value creation.”
Lane said overall, less than half of deals that pass an auction, linking one buyer, one seller, still don’t close.
“Focus is more than 80%,” he said, and “at the end of the day, everyone’s going to transact.”
Paul Hughes