Deal Snapshot: Collision Works

Collision Works is a leading multisite operator of full-service collision repair facilities in its core markets in the central U.S. Harris Williams recently advised Collision Works on its sale to The Boyd Group, Inc. 

Here, professionals from our Transportation & Logistics Group discuss what makes collision repair a compelling subsector of the automotive aftermarket. They also explore why Collision Works is a particularly attractive asset and what other buyers should know about this space.

What is appealing to buyers about collision repair?

Conner: The collision repair sector is ripe for investment. It represents a rare combination of attributes that drive substantial opportunity for institutional capital. There continue to be more vehicles in operation and annual miles driven, as well as roadway congestion and distracted driving, all of which are strong tailwinds for the sector’s continued growth. Another important dynamic is the increasing adoption of technology in vehicles. With increasing vehicle sophistication, the training and equipment requirements for repairing these vehicles increase, which favors larger operators and industry consolidators that can invest to meet the rising demands. 

Yousefian: This sector is highly fragmented, with between 30,000 and 35,000 collision center locations in the U.S. Many of these locations are single, mom-and-pop-style shops that struggle to make the types of investments needed as cars become more sophisticated. This scenario means that more and more work will continue to shift to larger, more sophisticated operations with brand-specific training and certifications.  

Conner: We see a massive opportunity to build out the next phase of regional operators. These companies will not only have economies of scale — they’ll be able to build relationships with OEMs, insurers, dealerships, and more. They can invest in the certifications required to work on both high-end and high-tech vehicles, because they’ll see enough of them each year to justify the upfront expenses.

Yousefian: The space also has unit economics and insurance-driven demand dynamics that create cash flow stability. A substantial volume of repairs comes from Direct Repair Program (DRP) relationships with large insurance carrier partners. These relationships allow for consistent volume, particularly for those providing the insurer’s customers with consistently high quality and service. The better job these shops do for the insurance carriers, the more volume the carrier will send to them. When repair shops then expand to new locations, they can count on quick cash flow from insurance partner referrals, without having to invest heavily in external marketing. 

What makes Collision Works a particularly attractive asset?

Conner: Collision Works’ footprint centered on key markets in the central U.S., particularly in Oklahoma City and Kansas City. It has grown organically and through acquisition, which has given it the scale to make investments in shop-level training and technology. Collision Works ensures facilities are outfitted with state-of-the-art equipment to repair increasingly sophisticated technology-based cars into the future. As vehicles gain complexity, Collision Works is positioned to gain market share at an increasing rate. The company’s footprint in core markets combined with best-in-class facilities made for a strong strategic fit with Boyd’s growing footprint of facilities in the midwestern United States.

Yousefian: Collision Works’ scale also has helped it gain OEM certifications and build strong relationships with the nation’s leading insurance providers. The company’s ability to invest in training and equipment enables it to repair all automotive brands, including the high-end automotive market. Collision Works’ OEM certifications drive volume through OEM and insurance partner referral. This is a competitive advantage relative to small shops, in which the referral volume to a single location does not support the investment needed to achieve certification.

What should prospective buyers know about this subsector?

Yousefian: Investors can help create the next wave of platforms and seize economies of scale. This may mean helping larger platforms gain geographic density or building new platforms by aggregating smaller players. Some of the greatest opportunities lie with local or regional shops with strong operations and technology, talented leadership, and a growth vision. With outside capital, the right operators can quickly grow and become real players within their regions.

Conner: There is significant continuing opportunity for consolidation in this sector: huge fragmentation, strong and stable demand, and very favorable payment dynamics. It’s a great time to jump in, and future sellers will have the opportunity to drive premium outcomes with both financial and strategic acquirers.