Car Wash M&A, The Podcast Episode 6 Overview

PREDICTIONS FOR THE REST OF 2022
Here’s the good news: while the economy tightens, there’s plenty of room for growth in the car wash industry. In fact, Jeff shares that many buyers are “still bullish about building this thing out.” However, the red hot car wash market has tempered a bit. Some factors that may affect growth and future returns are just how high interest rates will go as well as lingering supply chain issues slowing greenfield development. That said, the industry has fared well in previous economic contractions, and that trend remains in today’s market.

Jeff also talks about the potential opportunities current headwinds present for the industry: “I do think the folks out there that do a really great job will have an opportunity to grow. And we’ll find some of the weaker players that have been out there — whether it’s a weaker platform or a weaker operator — you’re going to see these guys go away.” In short, the strong will likely get stronger, and weaker operators may be faced with the reality that they can no longer keep pace. But with many growing chains’ continued appetite for acquisitions in effort to gain scale faster, there is still a healthy market for sellers.

WHAT BUYERS WANT TO SEE IN A TIGHTENING ECONOMY
While data shows drivers continue to wash their cars at a professional car wash even in tighter economic times, consumers will make more conscious choices about where and how they spend their money. Operators need to make sure that they are offering consistently excellent service so customers stay loyal and continue coming back, especially with more and more options.

Evidence from the pandemic and from other economic dips suggests that consumers will keep washing their cars, and they will maintain their memberships. However, as the competition grows and more brands come online, operations and a laser focus on the customer experience matter now more than ever.

In today’s market, buyers are becoming sophisticated and are looking more closely (and becoming more risk-averse) at what they are buying. Here’s what they want to see: sites on dependable real estate doing high volume, strong EBITDA, a solid leadership team and scalable infrastructure, and a clear pathway to growth with a development pipeline. Those are the chains that have traded at the highest multiple.

INNOVATIVE OPERATIONAL SOLUTIONS FOR CAR WASH OWNERS
Providing outstanding customer service is one way to stand out and keep happy members and loyal customers. Customer experience support solutions like what Amplify Ventures’ partner Retention Express offers can help protect memberships and enhance customer service by providing outsourced customer support. With an experienced, trained team answering customer calls, processing monthly plan cancelations, and monitoring all incoming communication across mediums, customers get the time, attention, and resolution they need to stay loyal.

As Jeff says about Retention Express, “They really have the best practices in retaining memberships. And we look at the memberships; that’s fueling this whole business. This industry is memberships. So we look at that as a critical component.”

Jeff states, “I don’t really like long learning curves. It’s very expensive. So you might as well take the best of the best, learn from it, and then provide those services to others. That’s where Retention Express fits in. I think, at the end of the day, we really do want to provide the absolute best practices in retaining memberships and expanding that out to the rest of the car wash community because it is the lifeline of their business.”

IMPORTANCE OF TRUSTED ADVISORS TO NAVIGATE FINANCING OPTIONS
Advisory firms like Amplify Car Wash Advisors can help owners know all their options when it comes to selling or scaling their business. For owners that want to stay in and keep growing, now is a good time to think about how to fuel that growth but also de-risk. Jeff talks about bringing in “smart money” that can help owners scale and move away from personal guarantees. While some investors look for majority equity, there are groups that will take a minority which provides owners capital to grow without turning over majority control. Likewise exploring REIT financing, debt restructuring, or issuance of new debt, are also alternatives. Having a trusted capital advisory team with seasoned investment bankers can help owners grow through third-party capital without going through a majority/minority sale.

As Jeff states, “As a firm, we’re getting calls every week from groups that want to partner in the space because even when you look at a looming recession, that doesn’t just affect car washing. It affects all retail, all businesses.” The general consensus is that car washing will fare better than most other businesses, so there’s still plenty of opportunity for operators looking to exit or to partner with someone to make a move even in today’s headwinds.

That’s where advisory firms can help people learn about what their options are. As Jeff shares about Amplify Car Wash Advisors, “At Amplify we are absolutely relationship driven. We are long term. We’re never in a hurry to want somebody to do a transaction. But there are a lot of things that we will look at from the market that they’re in, how they’re competitively positioned from a real estate standpoint, and from there, we just help give some advice on what path to go down.”

LONG STORY SHORT
In short, while short-term headwinds are impacting the economy, Jeff sees still sees long-term growth on the horizon with plenty of runway. And hey, investors still need to put money somewhere, so why not the car wash space?

Want to dive deeper into car wash M&A information? View all Car Wash M &A, The Podcast episodes here: https://amplifywash.com/podcast

Jet Brite Car Wash

With decades of hands-on experience as operators, when it came time to sell our car wash business who we sold to was important to Sam and me. Chris [Jenks] and the team at Amplify listened to us throughout the entire process. They found the right buyer in ZIPS who would be a good steward of the brand and helped find the best path forward for us where we can continue pursuing our passion for manufacturing high-quality car wash equipment.  

Jet Brite Car Wash  
Dave Delesandro  | Founder

Quick N’ Clean

My relationship with Commercial Plus over the past 20 years has been a very professional and trustworthy relationship. The feel of trust is very important in this business, and Jeff Pavone and his staff have exhibited a level of trust that makes me continue to feel that they have my best interest front of mind. I deal with many brokers across the nation, and my best experiences and results have been achieved with Commercial Plus representation.

Quick N’ Clean
Richard Karle | Owner

Zips

It’s been a great experience working with Amplify Car Wash Advisors to bring these sites into the ZIPS portfolio. We look forward to serving Dallas area customers with an enhanced car wash experience unique to ZIPS, with the added benefit of our extensive network of stores. This year we have continued our aggressive growth track with the goal to truly shine in our efforts to be the best express car wash provider in the industry and it’s acquisitions like this that help us reach our goals.

Zips
Gene Dinkens | CEO

ModWash

It was truly a pleasure to work with the Amplify team on our most recent acquisition of three additional operating locations in our home state of Tennessee. Their team provided great support and ensured a timely and seamless closing process, and we are excited for the additional growth opportunities this relationship will produce in our near future. We know this is the first of many transactions we will successfully complete with the Amplify team as we grow from our current operating store count of 23 to well over 200 locations across 14 states in the next two years.

ModWash
Brian Thornton | COO

Busy Bee Car Wash

For years I’ve talked to a lot of brokers with the same goal; sell your car wash chain as quickly as possible. But I chose to work with Amplify because they were interested and invested in the emotional side of selling my business and truly value long-term relationships. They weren’t forcing me to take a deal just to take a deal. They listened to my concerns and goals then educated me on all my options. And that’s how I decided on the right partner for my chain specifically. I went to bed at night after I signed the papers knowing I got the best deal possible versus just having any deal put in front of me that is only about money.

Busy Bee Car Wash
Jim Mulholland | Owner

Q Car Wash

We really appreciate Jeff and his entire team at Amplify. Their expertise and deep industry knowledge helped us navigate our options and best showcase our strengths to maximize our value. Caliber is a good fit for Q Car Wash as they look to expand in North Texas.

Q Car Wash
Viran Nana | COO

Cobblestone Auto Spa

I have known both Jeff and Bill for over thirty years combined, and respect them both as experts in our professional car washing industry. Their unique and individual strengths bring very strong talent and advice to operators, sellers, and buyers with sharp knowledge, client’s best interest in mind, and an actual personal touch. They hold the expertise and performance track record to hold a very high level of respect within this rapidly-changing car wash industry.

Cobblestone Auto Spa
Tuck Bettin | CEO

Oasis Car Wash

Turning over a business you started from one shovel of dirt 25 years ago and grew to several locations is a difficult and even uncomfortable process. So, when it came time for Larry and me to sell, we chose Amplify Car Wash Advisors to guide us through the process because of their strong reputation and thought leadership in the industry. Their team was professional and did a great job walking us through each step.

Oasis Car Wash
Dallas Hawkins | Partner

Busy Bee Car Wash

Selling our business after 52 years is big deal and certainly not a decision I took lightly, turning over our family legacy was an emotional process and I appreciated that the team at Amplify respected that. They helped me understand my options and found the best deal for me.

Busy Bee Car Wash
Jim Mulholland | Owner

Ducky’s Express

I have been a multi-site developer and operator in the car wash industry for over 30 years. Four years ago, a partner’s health concern forced me to sell a portion of my portfolio, and during that process, I was introduced to Jeff Pavone of Commercial Plus. I was immediately impressed with Jeff’s knowledge of my industry and his volume of successful deal closings. In a very short period of time, Jeff found the right buyer at a very fair price, and the transaction closed shortly thereafter. I was looking for a team with honesty, integrity, and a proven track record of success, and I found all of that in Jeff.

Ducky’s Express
Richard Miller

Trademark Car Wash

These are some of the most exciting times for car wash owners. As we grew 350% in revenue in just one year, we recognized the time to partner up with a top-tier team that has mastered growth in retail and specifically the automotive industry. Amplify Car Wash Advisors had helped us acquire, raise capital, and was the perfect partner to help us reach this next chapter of the Trademark story.

Trademark Car Wash
Andrew Goldberger