Former Keenan President Discusses ABRA Acquisition
What went into your decision to sell, and what made ABRA the best option?
I pay attention to what’s going on in the Industry and the window is starting to close, as far as the real high multiples and the prices because the MSOs over $25 million [in total sales] are being gobbled up pretty quick. If you’re one of the last ones, in my opinion, you’re probably not going to get as much value. So the timing was right.
We did it a little differently. No one was seeking us out. We decided to put ourselves on the market. I hired a firm called Focus Bank and we put together a CIM, a confidential information memorandum; it’s a package of what your company is. It took a lot of work to get there; several months. That went out to, I think, 11 possible suitors, and five came back with interest. We had business meetings with all five and after the business meetings we received bids from all five.
We chose what we felt was the best culture match. Price had something to do with it, too, but we wanted to make sure that it was a company that was a process-oriented company like us; had a strong, positive culture toward its people; and was an insurance-driven consolidator. ABRA fit into all those categories.
How have the first couple months of transition gone? Any surprises?
There were some surprises in there, but nothing too crucial. We knew we were going to lose accounting, so we lost four people there. They do a background check and they do a drug test. Fortunately between the two [tests] we only lost four [additional] people. Out of 166 that’s pretty good.
It’s different. Getting things approved, you have to go through channels now, whereas I could just pick up a phone or just walk over to my controller’s office and say I want this, this and this and it’s done. It’s more red tape.
Everybody at ABRA corporate, they’re all great from the top leaders to all of the people I’m working with in their call center. Everybody wants to help you out. The transition was pretty smooth. They said it was the easiest transition that they ever did as we’re pretty organized.
The technicians didn’t feel a thing, and upper management knew it was coming. They knew before the deal was done because there were too many rumors on the street. And that’s one thing you’ve got to do is damage control. I put the trust in my leaders not to spill the beans, and they did a great job.
The speed of the transition should have been slower, and everybody’s learning from it. A lot of our guys were working on learning and looked away from the customer. So we had some minor CSI issues in the very beginning, but we bounced back pretty quickly. They started Friday night and, by Sunday, all of the hardware was changed over, software was installed, everything was done and they had a whole team of trainers here for as long as it took. I think the last one left about two weeks ago. They do give you strong support, no doubt about that.
What are some of the key benefits you see from being a part of ABRA?
They're strength in numbers, for sure, from purchasing and discounts, things like that. Second one is you get paid. We sold our stock, so we got paid. And it’s done. I can’t tell you how much hard work it is, because when you do a stock deal, they grab the liability since our existence so there’s a lot more research you have to do to make sure everything is clean and clear.
The other thing is we wanted to grow rapidly. The only way to grow rapidly is to get some sort of financial backing or to go to a consolidator and we decided to go to a consolidator.
How do you view the collision industry’s future and do you see a place for independent shops?
There are going to be operators out there that survive, as long as they’re not surrounded. If you’re a heavy DRP shop and you get surrounded by consolidators, you will lose business, there’s no doubt, because they’re going to get the national deals. But there are going to be some operators out there in markets where the consolidators are not, and they’ll do well.
When you get into a metro market [like ours] and Service King comes in, I just knew it was only a matter of time before things were going to happen. The timing was just right for us.