Is Now Time to Sell?

Factors smaller operators need to consider in today’s market.

The current boom market in the car wash industry is not without risks, particularly for the smaller operators in the field. Ultimately, a major question looms over them as they consider planning for the future – Is this the best time to exit?

Every market now is being explored by some deep-pocketed group. The large companies that are securing multi-million-dollar financing deals and announcing plans to build hundreds of new locations are going to be moving into someone else’s backyard to do it. The bigger these players are, the more money they have to operate – and the more money they have to pour into sales and marketing. If you’re an operator, the minute that you see big brands come into your market and start scaling up with an imposing number of new sites you should be taking notice.

Everyone’s experiencing healthy revenue right now top line and bottom line, but when a competitor like that starts building nearby, you’re going to start losing a few hundred thousand of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Many operators who used to be very safe in their market are no longer so safe.

You’ve got well-financed competitors building at an aggressive clip, and it may be becoming clear to you that you’re going to have a difficult time to keep up. For owners with two or three locations, how do you survive when a regional or national brand floods the market with several times as many new sites? It’s hard to compete when a customer can use their membership at dozens of locations in the same market rather than just the two or three sites you’ve got.

If you’re an operator, you want to be able to control your own growth pace. You want to grow in a way that’s comfortable and makes financial and strategic sense for you. However, a large, wealthy competitor coming to your market can take that control away from you. Suddenly, it’s either grow or die. Fortunately, these larger operators also have a big appetite for getting big fast, and it may prove to be a prime opportunity for smaller operators to get a good price for everything they have worked so hard to build.

I see a lot of smaller operators who are trying to keep growing and time the market to wait to sell until they can get maximum value. I understand that approach. It’s possible that selling now means jumping off while the market has more to climb – and the value of your business has more room to grow. The potential risk, of course, is that you hold too long and become less valuable as you get overwhelmed by a larger entry to the market.

Another hurdle for those trying to build and keep up with the major players entering their market is that credit has become tougher to secure. A year or so ago, it was easier to go to your local bank, borrow money and keep building car washes. However, stung by the recession, those banks are becoming more conservative and concerned about potential losses. This particularly could cause trouble for smaller operators looking to invest in expansion without the backing of private equity or a larger, better-financed company. If they want to grow to compete, they might not find the money to do it.

Every operator is different, of course, with circumstances and characteristics that are unique to them and their market. Some operators may have the locations and brand loyalty to thrive even in the face of stiff, new competition. However, the upside of the current moment in the market is that this year on the whole may be the single best opportunity for a car wash operator to cash out and take their hard-earned wealth off the table. It’s definitely something to consider.

Jeff Pavone, Partner, at Amplify Car Wash Advisors, a national full-service car wash advisory firm. With a mission of creating wealth for clients, Amplify helps car wash owners sell, partner, or grow using practical industry experience as operators coupled with expertise in mergers and acquisitions, car wash sales, and capital advisory. Learn more atAmplifyWash.com

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