EXECUTIVE VISION
Collision’s
Destiny
Consultant Brad Mewes on mergers, acquisitions and the natural limits of consolidation
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rad Mewes works closely with business owners to help buy and sell companies, and provides services in strategic advising and corporate finance. Mewes has spent a lifetime in the automotive industry, and is currently the Group Facilitator with APEX Performance Group, and the Principal at Supplement Mergers and Acquisition Advisory. He has spoken on topics including mergers and acquisitions at IBIS, SEMA and NACE.
Collision Repair magazine: In your view, is consolidation complete in the Canadian collision repair industry? If not, how far will it go? Brad Mewes: No, I don’t think consolidation is complete. Looking at Canadian consolidation and consolidation in the United States, Boyd has a large market share but there are still many independent operators and large independent MSOs. There is still a high degree of fragmentation, and there is still room for companies like Boyd, Craftsman Collision, Kirmac Collision and others to grow and take more market share.
In terms of how far consolidation could go, look to other highly consolidated industries and you will start to see a natural limit on consolidation when the top consolidators control around 75 percent of market share in aggregate. CRM: OEMs are getting progressively involved in the repair industry via certification and recognition programs. What do you think the long-term impacts of this will be? BM: The increasing role of OEMs will serve to increase the relative capital required to operate a collision repair business. As OEMs
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enforce additional repair standards, it results in an increase of investments in training and equipment to meet those standards. It will be more expensive to operate a shop in the future as a result. CRM: How should insurers and shop owners react to these long-term changes? BM: It’s essential for shop owners to factor in increased investments of tooling and equipment. Often, small businesses get into trouble when they stop investing in growth—they need to rebudget to anticipate these changes and continue to grow.