Observations on Collision Works sale to Gerber

Sept. 1, 2021
In industry update, Focus Advisors Managing Director David Roberts says sale illustrates how large MSOs are creating value for their owners

We occasionally share our observations about events and developments in the collision repair industry. We think the recent sale of Collision Works to Gerber is illustrative of how large MSOs are creating value for their owners. - David Roberts

Gerber’s recent acquisition of Collision Works (CW) is the largest acquisition of an independent MSO in the last three years. Combined with the acquisition of John Harris Body Shops in South Carolina, we estimate Gerber has added nearly 10% to its overall revenues with these two large acquisitions. These two acquisitions by Gerber reflects the continued strength of large consolidators in growing their businesses. It takes a lot of revenue to move the dial on a big enterprise like Gerber.

We estimate Collision Works’ revenues in the $100 million range in Oklahoma and Kansas, three fast-growing Midwestern markets (Oklahoma City, Kansas City, and Tulsa, Oklahoma), and a host of smaller adjacent markets. John Harris operated 16 shops with an estimated revenue of $40 million with large and small shops across South Carolina and parts of Georgia.

Growth of Collision Works is a template for other rapidly growing MSOs

Jake Nossaman and his team built a solid foundation, beginning with large well-located operations in and around the Oklahoma City market. They continued to grow with both greenfield and acquisition strategies. CW entered a second large market, Kansas City, with a greenfield development and proceeded to acquire shops in and around that market. With an eight-shop MSO acquisition (Auto Craft), CW expanded its reach into the Wichita market and continued adding single shops to reach the full complement of 36 shops upon its sale to Gerber.

To finance some of its initial growth, CW teamed up with a substantial capital partner, Bank of Oklahoma. In 2019, it refinanced its real estate portfolio to acquire $50 million in additional capital, and used these resources to pay down debt and continue buying and integrating shops across their markets.

Exit Strategies

Along the way, Collision Works also looked at the possibility of joining forces with a very large private equity firm. In the end, because of its scale and infrastructure, Collision Works had multiple exit opportunities – from selling to a consolidator to recapitalizing the company with a large private equity investor, to merging with other strong operators.

With few remaining regional MSOs left in the U.S. approaching the size of Collision Works, we expect the scarcity value will allow those remaining operators with more than $50 million in sales to continue to find enthusiastic buyers – or private equity investors.

For rapidly growing regional and super-regional MSOs – scale, infrastructure, relationships with insurers and access to capital will be the primary elements determining future success.

About the Author

David Roberts | Managing Director, FOCUS Investment Banking LLC

Roberts co-founded Caliber Collision, the world’s first consolidator and now its largest collision repairer. Helping raise more than $125 million in capital for Caliber and other providers, he also led the acquisition of 37 individual shops and MSOs over nearly 10 years. As head of Focus’ Automotive Services Group, he leads a team of six professionals with deep experience in strategic advisory and M&A transactions for entrepreneurs, acquirers and investors in collision repair, mechanical services, quick-lube and insurance services.

Roberts more than 15 years experience advising sellers and buyers of middle-market companies. He holds a JD from the Boalt Hall School of Law at the University of California, Berkeley where he has been an Adjunct Lecturer since 2003. He earned an MBA from the Haas School of Business at UC Berkeley and earned his undergraduate degree from Duke University. He also served as an officer in the US Navy.

Sponsored Recommendations

Best Body Shop and the 360-Degree-Concept

Spanesi ‘360-Degree-Concept’ Enables Kansas Body Shop to Complete High-Quality Repairs

How Fender Bender Operator of the Year, Morrow Collision Center, Achieves Their Spot-On Measurements

Learn how Fender Bender Operator of the Year, Morrison Collision Center, equipped their new collision facility with “sleek and modern” equipment and tools from Spanesi Americas...

ADAS Applications: What They Are & What They Do

Learn how ADAS utilizes sensors such as radar, sonar, lidar and cameras to perceive the world around the vehicle, and either provide critical information to the driver or take...

Banking on Bigger Profits with a Heavy-Duty Truck Paint Booth

The addition of a heavy-duty paint booth for oversized trucks & vehicles can open the door to new or expanded service opportunities.