Vinart Collision Center
Profile
Number of Shops: 1
Revenue: $7.9mm
Location: Allentown, PA
Age of Business: 32 Years
Outcomes
Premium valuation generated by multiple offers.
Exclusive arrangement negotiated for dealer to supply parts to a higher-performing collision partner.
Dealer secures excellent lease with partner who prioritizes their recon and other repair needs.
Background
Andrew Wright, Managing Partner at Vinart Dealerships, had successfully built a thriving automotive enterprise with five locations including a free-standing 40,000 square foot body shop. Managing the body shop alongside multiple remodeling projects and ongoing acquisitions was stretching his resources thin. After reading the article by David Roberts, “Step Up or Step Back: Thoughts on Dealer Body Shops“, Andrew reached out to David for strategic guidance on how to solve the pain of managing the body shop while growing and remodeling his dealerships.
"With five dealerships to run, two remodeling projects underway, and due diligence on potential dealership acquisitions, my time and resources were stretched thin. Operationally, I didn’t have the bandwidth to commit to an increased investment in my collision repair operation. Trying to manage the financials of the collision center off of my Dealer Management System (DMS) was clunky. Dave Roberts ended up connecting with me regarding the possibility of selling the collision center. After speaking with him, I just felt like the time was right to explore the possibility of someone else coming in to take over the collision center that possessed the operational expertise that I felt I was lacking, especially if the financial terms were too good to pass up."
Andrew Wright, Managing Partner, Vinart Dealerships
Engaging Focus Advisors
In early May 2022, Andrew Wright, the Managing Partner of the Vinart Dealerships in Pennsylvania’s Lehigh Valley, picked up the phone and called David Roberts, the Founder and Managing Director at Focus Advisors. “I just read your article, ‘Step Up or Step Back’, and you were exactly describing my shop and my dilemma.” That article had provided David’s perspective on the advantages for dealership owners in selling their affiliated body shops. Those advantages included freeing up cash to invest in the dealership, entering a long-term lease with a strong tenant therefore boosting the value of the real estate, and – by selling the body shop to a highly capable operator – boosting the body shop volume, and therefore, parts sales from the dealership.
That first call started a conversation which culminated in the sale of Vinart’s 40,000 square foot body shop to VIVE Collision, an emerging consolidator headquartered in New York state.
"I sell and service vehicles. I don't sell body shops. I've always used professionals to advise me when I do my acquisitions, so my decision to sell the shop meant I was going to use a professional. Focus Advisors had the experience and the expertise to handle every part of a complicated transaction."
Our Process & Approach
Our deal team began the process by creating an accurate carveout of the collision operations from the dealership business, reflecting the true revenues and reconstructed earnings before interest, taxes, depreciation, and amortization (EBITDA) for Vinart’s body shop alone. This required working around the Dealer Management System (DMS) for accounting information, and then teasing out essential body shop personnel and expenses from the other dealer departments.
“Focus Advisors was meticulous in reconciling our financials across our business units. They went through each line-item month-by-month and found significant adjustments to EBITDA that boosted our market value. They consolidated their questions about any grey areas so that the process didn’t demand much time or energy of me and my CFO.”
Once we were confident in the financials of the collision repair operation being separated from the dealers’ other business units, we put together a 32-page investment memorandum and a financial workbook. These go-to-market materials required a deep knowledge of Vinart’s collision business. For instance, we assessed that the shop was overstaffed at the time of going to market. That was one of the top hurdles for us to overcome; we were able to solve it because we had access to many data points from similarly sized body shops; we had compiled data from our many conversations with other collision owners over the years.
The financial workbook we presented to buyers documented exactly how we separated the integrated fixed operations within the dealership’s financial statements. These detailed explanations proved crucial in helping potential buyers comprehend the financials of the collision business and arrive at a fair valuation.
We worked with Andrew to get the go-to-market materials to his liking, and then we circulated that package to the list of 11 potential buyers approved by Andrew. Through the many deals we’d worked on before, we had familiarity with each of the buyers and what they were individually looking for.
“The Focus team was able to clearly convey the attractiveness of the business to a list of buyers that I approved. I was confident the process would remain confidential, timely, and that Focus would field questions on my behalf, letting me focus instead on growing my dealerships.”
Results
Ultimately, two of the 11 potential buyers made offers through letters of intent (LOIs). We provided Vinart with analysis of the various terms of each offer, their pros and cons, and what the offers would mean for the combined value of the collision business, the dealerships, and the real estate.
“Focus Advisors drew on their experience with the two consolidators that made offers to give me insights into what to expect from each and the best points to negotiate. We decided to go with VIVE to maximize the all-around value for the business for the long-term.”
Both Vinart and VIVE had specific requirements. VIVE Collision sought dealership certification sponsorships and preferred referral opportunities from the Vinart Dealerships. On the other hand, Vinart emphasized maintaining high service levels for its customers and retaining key certifications. Chris Lane, President at Focus Advisors, described the process as “a delicate, but successful courtship and marriage”, as each side wanted something simple, but defined their goals somewhat differently.
Final details of the deal were worked out during the due diligence (DD) process. We acted as the liaison between the buyers and sellers and their respective deal teams, working through the details and status updates in order to navigate to a successful closing.
“Managing the due diligence process alone would have pulled a lot of my focus from my leadership responsibilities at the dealerships and dealer councils. Chris and Raul gave me regular summaries of the key items and risks so I could make informed decisions efficiently and not get bogged down.”
At the end, the deal turned out to be a win-win for both the buyer and the seller. During the due diligence process, the body shop’s performance surged with an increase in revenue and margins. So VIVE secured a more favorable deal than initially expected. Meanwhile Vinart leveraged its expanded managerial capacity to pursue an additional acquisition during the process.
A parts purchasing agreement committed the new VIVE shop to purchase all their parts from the Vinart Dealerships. Because of VIVE’s expertise and scale in the collision repair space, since the deal closed, VIVE has increased the shop’s overall revenue resulting in more parts revenue for Vinart.
