Last month, I attended The Car Wash Show in Nashville. Overall, it was a valuable event where we were able to connect with car wash owners and hear updates on the industry. If you missed it, here are a few of my key takeaways.
On the state of the industry
- The car wash industry remains strong, growing, and full of opportunity.
- Many believe that valuations are close to or have already peaked. Expectations are that valuations will remain strong, but will be fighting with other headwinds, which may drive valuations down.
- Given that the market is still growing and fragmented, there is plenty of strong interest in car wash sales, consolidations, and recapitalizations.
- There was added emphasis on the risk that exists for stagnant businesses without a defined strategy for growth or exit.
What’s driving the value of car washes
- Car washes that have a strategic plan for a multi-location operation (e.g., 3+) put themselves in a favorable light to outside buyers. Those with two or less are seeing negative pressures on valuations and exit opportunities.
- The express car wash model (instead of flex and full service) continues to see premium multiples and is the preferred model for roll-up strategies
- Car washes that have begun to adopt a corporate model/structure tend to see higher multiples as those organizations lay the foundation for future scaling opportunities.
- The macroeconomic pressure of rising interest rates and inflation will begin to cut into valuation models, resulting in lower multiples. This is something to keep in mind and think through very holistically while making strategic decisions.
- The emphasis on sound accounting and finance teams is a key to securing a higher multiple. As car washes continue to grow in volume and locations, the need for sound Generally Accepted Accounting Principles (GAAP) can separate your car wash from others and accelerate strategic conversations.
The biggest topic around growth opportunity
- The industry is very young when it comes to using data for improving the business, identifying preventative maintenance, and measuring customer experience. Those who have a strategic approach in capturing data, and then utilize data in their decision making have an excellent opportunity to get ahead and add value.
What does this mean for you?
If you are a car wash owner/operator, let’s connect today to discuss these takeaways. How are your goals for 2022 progressing, and what lies beyond? Is your car wash ready to add a new location? Have you assessed your exit strategy lately? Either way, after hearing the latest updates from experts across the country, let’s formulate a plan to define what growth means to you.
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