Deal Snapshot: FullSpeed Automotive

FullSpeed Automotive is an industry-leading automotive aftermarket services platform offering oil changes, tire sales and rotations, brake services, car washes, and other ancillary services in both company-owned and franchise locations. Its family of brands spans a broad geographic footprint of nearly 600 locations, and includes Grease Monkey, SpeeDee, American Lubefast, Uncle Ed’s Oil Shoppe, and others. Harris Williams recently advised FullSpeed, a CenterOak Partners company, on its sale to MidOcean Partners. MidOcean plans to continue FullSpeed’s aggressive growth plan through comprehensive organic initiatives and strategic M&A.

Here, Managing Director Joe Conner, Director Jeff Burkett, and Vice President Elliott Yousefian, all in Harris Williams’ Transportation & Logistics group, share their thoughts on what made FullSpeed an exceptional investment opportunity, as well as their advice for other investors interested in the automotive aftermarket space. 

What makes this an appealing space for buyers and investors?

Conner: Automotive aftermarket services is an inherently resilient sector with attractive fundamentals. Two trends underpinning the segment’s growth are that people are driving more miles annually and holding onto cars longer.1 As vehicles age, they continue to need maintenance. Routine services such as oil changes have to be performed on a recurring basis, so demand is repetitive and largely non-discretionary. Often, people do not want routine services performed at a dealership once their car is out of warranty because it can be more expensive and less convenient. So, options like FullSpeed are gaining popularity for their speed of service and convenience. In addition, consumer preferences are shifting from do-it-yourself to do-it-for-me–especially when it is fast and convenient–and that’s unlikely to change anytime soon. 

Burkett: Another factor is that multi-site brands have advantages over individual shops. Typically, customers are shopping for price and convenience, but they want to take their car somewhere they trust. Brand recognition builds trust. A customer may build a relationship with a neighborhood shop, but if they don’t otherwise have a preference, they likely will turn to a known brand. It might be that a consumer just moved to an area and used the brand in a prior location, so she will try it again. Platforms with multiple locations and the resources to market their brand can more easily build trust with customers. They also tend to focus more heavily on clean facilities and consistent quality, which attract repeat customers. 

Conner: Those are key plays from retail, which is why this space is attracting attention from investors typically focused on other kinds of consumer and multi-site businesses. There are many similarities. Consumer business investors understand four-wall unit economics, and they understand how to market to consumers. With some consumer segments hit hard by COVID-19, investors are looking for downside protection. 

What made FullSpeed particularly appealing to its investors?

Yousefian: FullSpeed is a scarce asset in an attractive market. It has a great footprint, with a strong presence in key markets, and it has demonstrated the ability to grow store count. It has a thoughtful expansion strategy, and has the corporate infrastructure in place to support a much larger franchise network and retail platform.

Burkett: FullSpeed also has a strong brand portfolio spanning quick lube, light mechanical, and car wash service models. Its brands provide multiple go-to-market options with the opportunity to build franchise density across store formats. The company also provides significant support for franchisees, including advertising, procurement arrangements, and unique financing initiatives, and it has received multiple industry awards as a top franchise opportunity.   

Conner: Another factor that made FullSpeed appealing is that it is led by a seasoned, highly accomplished management team with a great track record of value creation. The company has strong financial performance, compelling cash flow generation, and multiple levers to drive above-market growth. It has a demonstrated M&A acumen, having closed 11 transactions in 2018 alone, and its franchisee base provides a pipeline of actionable conversion opportunities. MidOcean brings an Executive Board member with more than 35 years of senior management experience in high-volume automotive consumer products and services businesses. He is expected to be an integral member of the FullSpeed team going forward, and will bring a playbook to help the company achieve even greater growth. 

What advice do you have for other investors interested in this space?

Conner: Scale is an important factor: It brings more leverage in terms of infrastructure and sourcing power. Location is also critical. This business is about convenience, and therefore, locations need to be in high-traffic areas where they are easily seen. They should be in places where the population is growing, as growth drives demand. While FullSpeed has significant scale, overall, the segment is in the early stages of consolidation. There are several smaller players that could be attractive investments.

Yousefian: These businesses can be very data-heavy. If you have the right technology in place, that can be powerful. The data can be used to optimize both operations and growth. For example, local operators are typically not equipped to do any sophisticated customer analysis or marketing. With the right systems, platforms can understand the most efficient routes to market and differentiate through more advanced customer offers and loyalty programs.

Burkett: It’s a resilient and growing market driven by consumers’ desire for quality, speed, and convenience in caring for their cars. If you can deliver on those needs, you can grow significantly.

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