30K Feet: Key Takeaways from The Car Wash Show 2019

Harris Williams professionals regularly attend industry conferences and events. On the flight home, they share three key takeaways to help shape your strategy.

Event: The Car Wash Show 2019

Report by: Jershon Jones, a director in the Transportation & Logistics Group

Event Overview: The Car Wash Show is the largest annual gathering of owners, managers and decision-makers from the car wash, quick lube and detailing segments.

Why is this industry on your radar?

Jones: “The car wash sector has seen a continued increase in investor interest and M&A activity. Given the industry’s highly attractive fundamentals, growth prospects and opportunities for consolidation, we expect the pace of M&A to continue to accelerate going forward.  

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“The car wash model is fundamentally attractive to investors. It is a recession-resistant category that benefits from the attractive dynamics of the broader car parc. There are more cars on the road, which are being driven more miles and will need to get washed over time. Historically, the car wash industry has been dominated by smaller mom-and-pop type providers, which provides runway for consolidation. In fact, we’re seeing ongoing consolidation across the supply chain: among car wash operators themselves, equipment and chemicals suppliers, and providers of technology and tech-enabled solutions. All of that consolidation draws the interest of more investors.

“Investors also like the segment’s potential for professionalization. They can add sophistication and improve operations, and there are profit and growth levers they can pull, all of which creates a very attractive canvas for investors. That’s what they like to see: fundamentally solid performance plus the opportunity to add value and consolidate.”

Which trends, companies or business models were top-of-mind at the event?

Jones: “The continued growth in investor interest is striking. We talked to private equity investors, patient capital and family offices, and multi-site retail investors, all looking to get involved in the space. We saw the interest last year, but the increasing intensity has been dramatic. It seems like the more these investors understand the fundamentals of the segment, the stronger their interest.

“There have also been a number of successful investments in the space. You could argue that it all started with a couple of important transactions in the sector around 2014. Since then there have been more consolidators emerging and building successful platforms, and that gives investors more confidence.

“In fact, given the increased interest in car wash operators, investors are also looking to play the space by acquiring equipment and technology suppliers. It’s a domino effect happening within the ecosystem, and the tidal wave is just getting bigger.”

What opportunities are these dynamics creating for strategic buyers and private equity investors?

Jones: “Even with all the investment happening, this is still a very fragmented market with plenty of opportunities for consolidation. At the same time, there are investors building some really special platforms that will create significant opportunity down the road. In fact, we expect transactions of all shapes and sizes as platforms for financial buyers and accretive add-ons for strategic players.”

Published June 2019

For more information on opportunities in the car wash market, please contact Managing Directors Jason Bass, Frank Mountcastle or Joe Conner, or Director Jershon Jones.