The pace at which Sun Auto Tire & Service Inc. has acquired tire dealers and auto service chains “has been quite rapid,” said Chris Garman, vice president of business development for the Tucson, Arizona-based company.
With a new majority owner, Leonard Green & Partners (LGP), based in Los Angeles, Calif., The buyouts are expected to continue at a strong pace.
And they won’t be confined to the Southwestern United States, Sun Auto Tire’s traditional home, he adds.
In late November, Sun Auto Tire announced the acquisition of Plaza Tire Service Inc., a 70 branch dealership based in Cape Girardeau, Missouri. The transaction is expected to close on December 31.
In October, Sun Auto Tire recovered 16 auto service points in the Pacific Northwest, all based in Washington.
Other acquisitions in the Southeastern United States – such as Hogan & Sons, a seven-location Virginia-based tire dealer that Sun Auto bought in September – are also possible.
The acquisition of Hogan & Sons was Sun Auto’s first transaction on the east coast.
The dealership “has a great management team and we believe we can grow” in the Virginia market over the next several years, says Garman.
“We really love the opportunity in this market and we really love the Hogan team. We still think there are a lot of opportunities in the Southwest, but where we think we can build a footprint with a good brand and good people and have room to grow – these are opportunities we don’t. will not want to let it go. Hogan is a good example.
“Lots of opportunities”
Founded in 1989, LGP has more than $ 50 billion in assets and has invested in more than 100 companies, including the Caliber Collision body chain, which has grown into what Sun Auto officials call “the world’s largest supplier of collision repair services in the country ”.
Garman says that “LGP’s experience with Caliber and other brands they’ve invested in that started out as Sun” will prove to be invaluable. The expertise to get from where we are today to where we want to be in five years is an important part of what they bring to the table.
Independent tire dealers are an attractive target for investors, Garman notes.
“We’re in a very fragmented industry – even with all of the M&A activity going on – with lots of opportunities, particularly in the Southwest, Northwest and some other southern states.
“We always like to say we’re a relatively recession-resistant industry and that makes us attractive. I think we will see some activity (M&A) for the foreseeable future. “
When looking to acquire tire dealers, Sun Auto considers different criteria, according to Garman.
An attractive footprint, “a strong reputation” with customers and “then obviously revenue” are key pieces of the puzzle.
“If we are entering a new market, these requirements may be a little different. If we are already present in a market and are looking to expand our presence, is (the potential acquisition) complementary to what we are doing there?
“At the end of the day, we’re looking to buy good companies,” he says. “We’ve been fortunate to have bought some great companies that are full of great people and we’re doing a great job of retaining those people. “