Car Wash M&A, The Podcast Episode 7 News Overview

As the car wash industry continues to consolidate, and as shiny new washes come online, many current owners are thinking more aggressively about their future growth plans as well as investing money back into existing sites to keep pace with the competition. But where does the money come from?

Episode 7 of Car Wash M&A, The Podcast explores options car wash owners have for funding growth and capital improvements with the guidance of a seasoned investment banker.

HOW TO FUND GROWTH AND MAINTAIN YOUR OWNERSHIP
When looking at ways to facilitate growth, taking on a financial partner like a private equity group can have many benefits, but it’s not the right fit for all owners. If maintaining full operating control and the existing company culture of your business is important to you, there are other ways to grow.

Sourcing financing through non-dilutive debt, be it from a bank, finance company, or an institutional REIT in a sale-leaseback, has its advantages. Without an exchange of equity interest, there is no change in ownership or operating control, which opens other attractive options for owners looking to stay in the game and scale or make capital improvement investments. It can also be more cost-effective, especially on an after-tax basis, versus equity, which can be much more expensive.

INVESTING IN CAPITAL IMPROVEMENTS TO STRENGTHEN YOUR BUSINESS
In addition to traditional growth models, raising capital to invest in equipment upgrades and other improvements like technological advancements can certainly pay off. While historically tech advancements in the car wash space have lagged as compared to other similar service industries, that is changing. Earlier this year Amplify Car Wash Advisors launched a new vertical within the firm, Amplify Ventures, with a mission to help owners maximize their business value by supporting the development of tools and helpful technology to streamline operations, establish systems, and poise themselves for scalability.

As Bill Koenig shares in the episode, it can be powerful to “leverage capital to deploy back into the business, to enhance the operation, enhance the equipment, enhance the technology that’s in use to drive efficiencies, all those things that will help make the business more competitive, and ultimately more attractive to customers.” Making investments in the business that drive future free cash flow will enhance the value of the business, both now and in the future.

ADVANTAGES OF PROFESSIONAL REPRESENTATION
There are distinct advantages of hiring a professional advisor to represent you when it comes to raising capital. For one, the person (or group) on the other side of the table likely has more experience at this than you do and will push for the most favorable terms and conditions to their benefit, not yours. So, it’s in your best interest to have a representative who will advocate on your behalf, who knows which terms are customary for transactions of the same type and nature as yours, and who can create competitive tension amongst capital providers to get you the best price and terms.

Lenders are looking at your liquidity, solvency, and how to mitigate risk, and an investment banker can help you address those factors and advise on the best way to structure credit facilities. Equally important, a good investment banker knows who to call within banks or non-traditional lending sources that understand car wash lending, and that can help get you a favorable response to your request.

“There’s a lot of work that goes into this, too,” shares Bill. “Banks don’t just want to see financials; they want to see projections, they want to see management team bios, they want to see subscription trends, they want to see churn trends. It’s not the same level of due diligence that a private equity buyer or a strategic buyer would look at in a full-blown sale, but there’s still a fair degree of due diligence that they dive into. And we can help pull all that together, put it in a nice clean package that we can then share with 20 or 30 lenders and create that competitive tension, that dynamic, that’s going to get our clients the best price in terms.”

CAR WASH TRENDS TO WATCH
As you consider ways to grow and optimize your car wash business, knowing where the industry is headed in the future can help with your decision-making today.

Bill predicts, “the technology overlay is going to be tremendous. Virtually every financial buyer we’ve talked to talks about the lack of technological innovation, artificial intelligence, and other electronic digitization methods that have not been overlaid over the industry or used to leverage efficiencies in the industry. That technology overlay is definitely going to continue through the end of the year and into 2023.”

Additionally, the availability of financing and the appetite from creditors to continue to lend into the industry continues to evolve. According to Bill, “A lot of people were concerned about an economic slowdown and how that may affect the M&A activity in the car wash space. And frankly, I haven’t seen that yet. There still seems to be a tremendous amount of interest to consolidate in the industry from both financial and strategic buyers. That doesn’t appear to be slowing down at all.” In short, financial institutions, lenders, etc. have to put their money somewhere and the car wash space remains an attractive place.

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