Auto Service World
News   April 18, 2023   by Adam Malik

How to target your next acquisition


Image credit: Depositphotos.com

When Troy Kaplan set out to grow his business, he wasn’t interested in scoring a deal. He didn’t want to acquire shops that needed a lot of work.

He set a bar. The shops he wanted to buy had to have a minimum in dollar sales and at least a certain number of bays. They had to be running strong and without much interference from the owner. He wasn’t interested in fixer-uppers.

Speaking at the Midwest Auto Care Alliance Vision Hi-Tech Training and Expo, he said anyone looking to grow through acquisition needs to decide what kind of shops they want to take on. It’s fine if you want a fixer-upper. But define your target.

In his case, Kaplan, a senior consultant with Transformers Institute, was fine with paying a premium for a business that was high-performing, established in the community and had strong cash flow.

Greg Bunch, a speaker trainer with Transformers Institute, and multi-shop owner, noted that there are many different types of shops out there. Some are in growth mode. Others are in exit mode, where the owner just wants out. It’s important to narrow it down.

From left, Troy Kaplan and Greg Bunch from Transformers Institute speak at MWACA Vision 2023

A fixer-upper might be “the right answer for some people maybe, but just because it’s a good deal doesn’t mean it’s the right deal,” Bunch said.

But for most, both speakers noted during the session Executing Successful Acquisitions, your second location is generally going to be a fixer-upper simply because you likely don’t have the money to go out and get a higher-end business.

“And then once we got out of our comfort zone and paid a lot of money for a good location, it was kind of an eye-opener,” Kaplan said.

Kaplan owns TGK Automotive, which has more than 20 locations. His company added 14 shops in a 12-month period. There was no time to worry about an underperforming shop. He realized how much easier it was to add an established, well-run business to the fold rather than one that required a lot of blood, sweat and tears.

“So that was kind of our M.O. moving forward: I don’t want anything that’s underperforming or not doing well right out of the gate, because it’s going to consume our time,” he said. “And being in expansion and rapid growth, you only have so much time.”

That meant spending more money on each deal, but they were fine with that.

“To have it well-established, cash flowing as best as possible, great reputation, awesome people working there where we could retain the staff — as you all probably know, it’s not easy to find people these days, so people is a huge part of what we are also acquiring” was important, he said.


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