Private’s Equity’s Influence on Consolidation Predicted to Continue Amidst COVID-19 Disruption, Structural Change by Vincent Romans, as told to Stacey Phillips
uring the S S mposium in ovember, V incent Romans, managing partner of he omans roup, presented a macro level view of the evolving S collision repair industr ollowing the virtual show, omans shared further insight from he omans roup industr research with Aut ob od y N ew s contributor S tacey P h illip s, following trends on consolidation, private e uit E and the auto ph sical damage landscape n the following article, omans discusses the impact of on the collision repair industr and e amines how E continues to in uence structural change with consolidation will forever be seen and remembered as a generational foundation ear of significant disruption and structural change for the world with far reaching economic, social and political implications At the omans roup, we have discussed and profiled the ongoing disruption ta ing place during the last five decades as part of our stud of the longitudinal evolution within the collision repair industr , and its auto ph sical damage ecos stem s multi segment structural transformation e entered with one of the best business and economic environments ever b all comparative standards e were then une pectedl hit b a con uence of e ternal events impacting near and longer term visibilit overshadowed b continued uncertaint hese include s uncertain impact a slow, hobbling, uneven healing econom social unrest in the S presidential election results and tensions between the S , hina and ussia he recent disruption caused b the pandemic will accelerate change in wa s that ma e it di cult to predict what the effects will be throughout the broader auto ph sical damage ecos stem here are man industr constructs la ing the foundation for change, opportunit and uncertaint
as we transition to owever, we e pect to emerge from with stronger nascent and legac leading businesses that were well capitali ed with strong balance sheets pre , as well as emerging disrupters who were at the right place and time with new norm solutions that became opportunities for success and competitive advantages e have seen man repair organi ations able to not onl maintain their operational and financial well being, but also to be profitable during the pandemic A combination of the ederal eserve s periodic economic intervention, the collision repair industr s designation as an essential business, available loans and earl reductions in labor force actions initiated b repairers all helped contribute to man repairer s positivel navigating the pandemic Since ebruar , we have seen a number of mar et d namic changes that seem to be at the top of the more in uential and impactful near term con uence of prevailing industr conditions during and post pandemic rastic decrease in miles driven, accidents and claims processed compared to the same period in A reduction in the collision repair addressable mar et, otal Available ar et A , in , et to be determined ncreased vehicle repair comple it due to growing penetration of embedded A AS technolog and calibration re uirements ontinued acceptance and adoption of E certification programs echnician shortage mitigated in the short term due to furloughed and terminated technicians, but sourcing, recruitment and retention continues echnicians and collision repair owners are now even more selective regarding hiring and retaining the best Evolution of business segmentation strategies with the largest consolidators mar eting to insurers their uni ue one national shop model platform his is further segmented with collision repair locations providing specific capabilities including
glass installation, e press , same or ne t da service, non drive total loss processing and disposition, E certification, advanced material and or mechanical repair, and diagnostic services including pre and post repair scanning and calibration Artificial intelligence, machine learning and computer vision geared to the development and adoption of collision repair estimating eventuall impacting shorter claims processing and estimate accurac Accelerated digital transformation including acceptance of virtual claims photo processing and financial pa ments rivate e uit s continued interest and activit in activel see ing out investments throughout the auto ph sical damage ecos stem and collision repair consolidation Impact of Private Equity on Industry Consolidation t s no secret the collision repair industr has e perienced and will con-
tinue to re ect significant consolidation, both in terms of the number of repair locations ac uired and the transfer of ownership he number of repair organi ations has decreased considerabl since , while consolidator and larger multi shop operators S s have created multi location, multi regional and national S s that now represent of the collision repair industr s A ith ever increasing E funds and record levels of dr powder unallocated capital on hand it is anticipated that transactions within the collision repair industr and broader auto ph sical damage landscape will continue at a constant pace E organi ations continue to be attracted to collision repair for several reasons the health and growing industr A , strong positive cash ow, the view that collision repair is somewhat recession resistant as re ected in the recession downturn economic c cle
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