Car Wash M&A, The Podcast Episode 12 News Overview

What actions can car wash owners take today to help navigate current conditions and to encourage future success? Guest Paul Sigfusson, a recent addition to the Amplify team, joined host Lanese Barnett on episode 12 of Car Wash M&A, The Podcast to share insights and tips from an investment perspective.

Paul and Lanese talked about how current economic conditions impact opportunities to partner with capital providers to grow, and they share strategies car wash owners are putting into action to best position themselves for long-term success.

THE RETURN ON INVESTMENT AMID CURRENT CONDITIONS

As we all know, the car wash market is changing amid current headwinds, and deals that were once quick and easy now require more due diligence, and the process can take longer. However, that is not all bad news for car wash owners. Paul shares, “As you think about the translation into cost of capital and the impact of making a return, you used to get paid back for making an investment in the car wash space in two to three years, under some normalized scenarios, and they can vary greatly.

“But if you include a 50% to 100% increase in cost of interest rates of financing that car wash, as well as continuing to double down the operations, that cost of capital and that return on investment is getting close to double where it was 12 months ago.

“And so, what that’s going to force in this industry — and I think it’s a healthy thing, again, back to this period of normalization — that’s going to force investors as well as operators to make sure they’re thinking twice about capital deployment. Is this a productive form of capital deployment in the space? These are capital intensive units. And I think that’s a very healthy part of the industry.

“It won’t be growth for the sake of growth.”

As Paul observes, growth in today’s market is more strategic and more goal-oriented, and that can be a benefit to individual car wash owners and also to the industry on a broader scale.

THE UPSIDE TO THE CURRENT ENVIRONMENT

Although the current climate presents some challenges to car wash owners, there are benefits as well. This is an excellent time for strong operators to distinguish themselves from competitors by building up a strong foundation and by offering an outstanding customer value proposition.

Paul states, “In terms of scenario planning, and starting to think about the future, it’s always been difficult in a rising tide environment. In the environment where everybody’s being lifted by low interest rates, the conditions are pretty benign, and it’s very difficult to differentiate your brand in that environment.

“And I think about the conditions in a more uncertain conditions setting as an opportunity to double down on yourself, your operations, your people, and how to go out-execute for the consumer, at the expense of your competition. All those things will add up into helping prepare operators for the uncertainty that is in front of us, which no one can really sort of paint out in a clear picture.”

COMPARISON TO OTHER INDUSTRIES

Despite consumers tightening their wallets amid inflation and other economic disturbances, car washes continue to show value to consumers. The express car wash model is proving to be very resilient, and membership plans have strengthened the industry against fluctuations in weather and season.

As Paul states in the episode, the car wash industry “continues to be a place where consumers enjoy; it’s a consumer service that puts a smile on somebody’s face. You hear a lot of operators talk about that. I love hearing that. And ultimately, it provides a consumer convenience and value proposition that is really interesting and really, really valuable to somebody over time.”

LONGTERM GROWTH FOR CAR WASH OWNERS

When considering the capital options that car wash owners have to help them fund and fuel growth, Paul shares, “There is plenty of direct lending debt capital. There are creative minority equity partners; there is still a functioning real estate market. All of these still exist today, and they are continuing to build support and continuing to have more and more interest.

“In this market, and in a more challenging, more uncertain times, it takes more creativity between the operator and the financing partner to come up with the appropriate solution that’s right for that operator. But there is plenty of capital out there for people to find solutions for growth. And I think people should be excited about the growing interest in this space.”

Stay tuned the last Thursday of each month to hear the latest thoughts from podcast guests.

For more tips from Paul Sigfusson, check out the full episode of Car Wash M&A, The Podcast.

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

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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