ABRA’s Approach to Consolidation
As ABRA put the finishing touches on the biggest acquisition in its 34-year company history on Oct. 26, chief operating officer Jim Kessler sounded both calm and confident.
Not only did the acquisition put Kessler’s company in position to be competitive in the California market, it also just felt right, he explained. After all, Kessler was confident that ABRA and Cooks Collision had shared similar company cultures.
Just a few weeks earlier, Kessler had been part of an ABRA team that flew out to California to help Cooks Collision owners Rick and Don Wood explain the merger to their employees. To Kessler’s pleasant surprise, employees expressed very few concerns following the acquisition.
“We really wanted to get the [Cooks] leadership team onboard and excited about the transaction—and the great news is, we were able to do that,” Kessler says. And, “over the next 48 hours, we made it to every center and talked to every employee.”
After acquiring Cooks and its 38 locations, ABRA was left with 396 total locations throughout U.S. 28 states (As a privately-held company, ABRA doesn’t disclose financial information such as sales or revenue).
As ABRA finalized its acquisition of Cooks Collision in late October, Kessler explained to FenderBender his company’s strategies when seeking to acquire MSOs.
Analyze Real Estate Development.
Cooks Collision, with approximately 800 employees, had long referred to itself as the largest family-owned collision repair company in the U.S. And, Cooks had been pursued for potential consolidation for more than 20 years.
But ABRA pursued Cooks owners Rick and Don Wood aggressively enough to seal the deal by early last fall.
Why were ABRA officials so convinced that acquiring Cooks was ideal? Because their real estate development team said so.
“We have a technology tool that we use to help us identify markets and areas that we believe will be successful, [with] a bunch of different indicators in there … to help us predict where it makes sense to go,” Kessler explains.
For example, ABRA’s real estate development team analyzes statistics such as the amount of accidents in an area on an annual basis.
“We have a financial model that we use to help us decide,” Kessler continues. “Once we
identify a target area, we have a team that will start to [ask] ‘Does it make sense?’ … And then we start to really reach out.”
Fill Out Existing Markets.
Being in heavily populated states such as California, Texas, and Florida appeals to many consolidators. And, in that respect, ABRA is no different.
So, once a large collision repair company like ABRA lands in California, there is great appeal in attempting to fill out the entire market.
“Right now, we definitely have a focus on our existent markets, to continue to fill out the market that we’re in so we can leverage the infrastructure that we have,” Kessler explains. “And entering California, it’s a big market, so we’ll have interest in how we fill out California going forward. And then, [regarding] new markets: If an opportunity comes up like Cooks [again], we’re more than happy to consider it.
“But priority No. 1 for us is going to be existing markets that we’re in—let’s make sure we fill them out properly.
“California is one of the top priorities that we have as a company, to be able to fill out the market. … We believe we could have 100 centers in southern California.”
Kessler explains that the greater Philadelphia area serves as a prime example of ABRA’s main expansion strategy; currently, the company has a strong presence in the Philadelphia metro area and in southern New Jersey, which has inspired the consolidator to increase its presence in nearby communities such as Harrisburg and Reading in Pennsylvania to broaden ABRA’s reach in the region.
Eventually, Blanket the Country.
Kessler takes pride in the fact that ABRA has both franchise and company-owned stores, giving the company a versatile profile that works in both cities like San Francisco and rural areas like South Dakota.
He isn’t, however, completely pleased with the fact that ABRA’s current coverage map of the U.S. essentially resembles a frowning face, without enough locations in the country’s Northeast, Southeast, Northwest, and Southwest regions.
But acquiring MSOs like Cooks Collision could change all that relatively quickly for ABRA.
Kessler says he can envision every corner of the country eventually having at least one ABRA collision repair center.
“We do see that pretty much every state should have an ABRA,” he says. “And we’re really not limiting it to the normal, company-owned type of infrastructure that some companies have to deal with. So, we do see something ultimately being in every state.”