Car Wash M&A, The Column

Pulse on Carwash M&A Activity

We’ve seen the shift in growth strategy for carwash platforms and how they are approaching scalability. The old playbook of acquiring existing platforms and blending down the multiple through Greenfield developments just doesn’t work today. The cost of building new units has increased, with budgets reaching $7.5 million or more, and delays in construction and ramp-up time further impact the overall investment. This shift has demonstrated that acquisition activity is becoming more attractive, with multiples generally coming in at the 8-10 range.

For owners, this means now is a good time to explore your options if considering an exit. The buyer pool remains focused on quality businesses with prudent capital deployment, strong same-store sales comps, financial discipline and a healthy growth trajectory. This is particularly true for geographic areas or MSAs that are harder to penetrate.

Democratization of Technology

Operators are laser-focused on improving margins and adding to the bottom line by maximizing efficiencies and strengthening their operations. With that, we’ve seen a democratization of technology available for the broader carwash operator. The emergence of more sophisticated companies looking to provide supplemental support solutions specifically geared toward the carwash space is freeing up time and attention for operators to focus on operations. What once required an expensive agency or dedicated in-house development team is now more widely available, and by engaging with these support and technology solutions providers, many operators are increasing efficiencies while delivering high-quality services and cultivating customer loyalty.

For example, AMP Memberships provides a custombranded mobile application platform solution developed by carwash operators to engage and nurture customer relationships while providing valuable data insights. By collecting demographic information and combining it with customer activity and business insights, AMP Memberships’ platform enables targeted marketing that aims to attract and retain customers based on their preferences and interests. This personalized approach allows carwash owners to connect with customers on a deeper level that in turn fosters long-term relationships that are extremely valuable.

Understanding the Lifetime Value of a Customer

The ability to assign a predicted lifetime value to each customer helps operators understand the expected revenue, operating costs and potential duration of the customer relationship. AMP Memberships platform uses your customer data to identify and optimize lifetime value through targeted actions. For example, AMP empowers carwashes to identify happy customers (e.g., they have washed three times in the last month) and ask those customers to leave public reviews or easily refer friends and family through the app — these actions increase loyalty and maximize the value of each customer. For more about leveraging customer data to cultivate long-term loyalty and grow memberships, listen to Episode 13 of Car Wash M&A, The Podcast, “Talking Tech: Data, Marketing, and Memberships,” featuring an interview with Dennis Dreeszen and Adam Trien, founders of AMP Memberships.

Processing customer inquiries and complaints can be a big pain point for operators, fraught with bottlenecks. Failing to promptly handle such inquiries negatively impacts a customer’s relationship with the company. Comprehensive customer experience platform Retention Express provides a white-labeled outsourcing service tailored for carwashes to handle customer inquiries, relieving operators of the burden, and allowing them to focus on core operations. By using professional carwash-focused call centers, Retention Express ensures that your customers receive prompt and quality service across various communication channels such as phone, email, text messages, and web chat. This is particularly beneficial during peak volume times, preventing distractions and long wait times that can frustrate customers.

Beyond simply addressing immediate customer needs,  this platform captures valuable data from these interactions, providing operators with a comprehensive dashboard that offers insights into customer sentiment, preferences and behavior. For instance, it tracks why a customer wants to cancel their plan, shedding light on what’s impacting churn and enabling businesses to make informed decisions to enhance customer satisfaction.

In a tighter economic environment, leveraging external expertise and technology can be a huge benefit in helping optimize your business. Partnering with the right solutions providers can help streamline operations, improve customer service, and gain actionable insights that contribute to the growth and success of your carwash without having to reinvent the wheel.

Saving Money as Cost of Capital Rises

As the cost of capital continues to rise, carwash owners are turning more of their attention to how to save and ultimately improve profitability and enterprise value. One way to do so is to take a serious, detailed look at your credit card processing fees. But frankly, no one wants to or has time for that. By engaging with a specialist to examine credit card processing statements, carwash owners can uncover easy methods to significantly reduce processing expenses. Merchant Advocate’s services take a deep dive into credit card processing fees by using a forensic accounting approach. They assess how charges are coded, search for errors, and seek to find savings without requiring carwash owners to switch processors or pay upfront fees.

In today’s credit card-driven world, a 2 percent difference in processing fees can make a substantial impact on your bottom line. By leveraging innovative technology and machine learning models, Merchant Advocate analyzes your credit card processing charges, compares them to your historical data and industry peers, and identifies unusual categories. They then work on your behalf to negotiate lower fees with credit card processing companies. For example, they can detect and rectify recurring charges associated with declined credit cards, which can accumulate into substantial expenses for multi-unit operators. In one case study, they identified $60,000 in annual charges for failure to respond for an 80-unit operator, highlighting the potential for significant savings.

Adapting to Market Trends

As mergers and acquisitions regain momentum amidst high capital costs, there’s good news for carwash owners considering an exit. With demand outstripping supply, buyers are seeking well-performing carwashes in desirable locations. Embracing new technology is crucial, as it streamlines operations and boosts cash flow. By adapting to these changes and implementing effective strategies, carwash owners can continue to thrive in an evolving industry.

Lanese Barnett is Senior Vice President of Business Development at Amplify Car Wash Advisors, the number one advisor of carwash chains nationwide. With a mission of creating wealth for clients, Amplify helps carwash owners sell, partner, or grow using practical experience as operators coupled with expertise in mergers and acquisitions and capital advisory services. Keep up to date on the latest carwash M&A activity with Car Wash M&A, The Podcast Lanese hosts monthly and sign up for Car Wash M&A, The Newsletter at AmplifyWash.com. You can reach Lanese at [email protected]

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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