Explore Matt Ebert’s journey from a single repair shop to 645 locations and how private equity fueled his growth.
Weekly Pilot Briefing
This week’s Built to Sell Radio episode features Matt Ebert, the Founder of Crash Champions, a company specializing in auto repair. Listening to this episode, I found it really interesting to hear how Matt took a hobby, to a passion, to a job, to an insider acquisition, to a successful single location business, to eight locations, to a private equity merger, and finally to the 645-location behemoth it is today. Matt’s story brings out a lot of essential concepts that small business owners should be aware of, including when/why to expand and sell, the various options for capital raising, challenges that come with scaling a business in any industry and some lessons learned, and mistakes made during his journey. I found the discussion at 43:30 to be very enlightening as he outlined the typical timeline and scope, and the “musical chairs” nature in consolidation-prone industries (like trade companies and veterinarian practices).
Some timestamps for you to consider and jump to, if you are short on time:
12:00 – Why/When to Expand?
16:00 – Capital Raising Options (Mezzanine Debt vs. Venture Debt vs. Private Equity)
28:45 – Things You Must Improve When Scaling Your Business (Financial Literacy, Financial Discipline, Talent Management)
33:00 – Mistakes Made Along the Way (Specific Intent, Value Maximization, a Focus on EBITDA)
35:00 – “Green Fields” Expansion vs. Acquisition
38:00 – Tax Strategies/Advantages (Cash Purchase vs. Seller Financing vs. Equity Roll)
43:40 – Navigation and Timing Sales in Acquisition Industries
48:45 – “The Optimal Time to Sell Your Business?” (Hint: When Someone Wants to But It)
About this Episode
Matt Ebert’s path to founding Crash Champions didn’t start with a grand plan—it began with a car wreck. At 16, he found himself needing to fix his own car, sparking an unexpected passion that led to building one of the largest collision repair companies in the United States.
In this week’s episode of Built to Sell Radio, you discover how to:
Sell a majority interest in your business and leverage private equity for growth.
Build a company through strategic acquisitions.
Weigh the pros and cons of growing versus cashing out.
Understand the risks of staying stagnant in a consolidating industry.
You’ll hear the story of how Ebert sold a majority interest in his business, and how he now approaches buying companies to expand Crash Champions into a national brand with 645 locations and $2.8 billion in revenue.
About Our Guest
Matt Ebert
Matt Ebert is the visionary driving force behind Crash Champions, a prominent player in the automotive collision repair sector.
As the founder and CEO, Ebert’s entrepreneurial drive propelled a local New Lenox, IL repair center, to become the third-largest multi-shop operator (MSO) in the U.S. Under his leadership, Crash Champions has expanded to over 600 locations across 37 states, garnering recognition from industry experts and investors.
Ebert’s commitment to infusing a vibrant culture of empowerment and progress positions Crash Champions as the preferred employer in the field.
Definitions
Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, adjusted to reflect the profitability of your business in a buyer’s hands. Typical adjustments that may drive up reported EBITDA would be things like executive compensation (assuming you’re paying yourself more than it would cost to replace you with a general manager), personal travel, automobile expenses, one-time extraordinary expenses (such as a lawsuit), etc.
Due-Diligence: This is a comprehensive appraisal of a business or investment undertaken before a merger, acquisition, or investment. It seeks to validate the information provided and uncover any potential risks or liabilities.
Earn-out: This is a financing arrangement for the purchase of a business, where the seller must meet certain performance goals before receiving the full purchase price. It reduces the buyer’s risk and aligns the interests of both parties post-acquisition.
Mezzanine Debt: Mezzanine debt is a kind of borrowing that sits in between regular debt (like a typical bank loan) and ownership stake (like owning shares in a company). It’s not the first debt to get paid back if a company runs into trouble, but it’s ahead of stockholders. So, it’s sort of in the “middle” — hence the term “mezzanine,” which often refers to a middle floor between the ground and main floor in a building.
Why would anyone go for this middle-of-the-road option? Well, mezzanine debt usually comes with some sweeteners, often in the form of “warrants.” These are like bonus tickets that give you the option to buy shares in the company later on. So, besides getting your loan repaid with interest, you might get a piece of the company’s future growth.
Companies often use this type of debt when they want to buy another company or when they want to change who owns the company, such as in a buyout. It can make the deal more attractive for the new owners and help it happen more smoothly. If things go south and the company can’t pay its bills, mezzanine debt gives the new owners a better spot in line to get their money back compared to some other stakeholders, but they’re still behind regular bank loans and other more senior forms of debt.
In short, mezzanine debt is a more flexible and potentially rewarding form of borrowing that’s often used in big business moves like acquisitions and buyouts.
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