car wash partners
Car Wash Partners
Type of Deal (the method for making money)
“Roll up” vs “Start up”
Differences and similarities (“low risk, high return”?)
Nature of risk in roll ups (operational scale/execution capacity)
Build company quickly by leveraged acquisitions (at low P/EBITDAs)
Economies of scale/cost reductions
Go public at higher multiple
Car Wash Industry Suitable for Roll up?
Low risk
High margins, “barriers to entry”, simplicity
Highly fragmented, unorganized
“Leveragable”?
“Improvable”? (by applying advanced management techniques)
“Upgradable” into more (related) services
“First mover” advantages?
Does value of improvements affect consumer?
Projections
Systematic? Credible? How do you know?
Sensitivities?
What happened to the gross margins?
Willing to use these projections for valuation?
Car Wash Partners
Management
Tom Curtis – successful entrepreneur from the past. Credible?
Curtis capable of leading major change in this industry?
No further management team as yet
Investors
Cabot Brown (Brown & McMillan)
Start up-VCs?
First deal
Who are their investors?
Bill Burgin (Bessemer Partners)
Experienced VC
Investing with a friend?
Does the investment fit their needs?
Car Wash Partners
Valuation
Who puts up the money? (BMC, Bessemer; total of $6.6)
How much is Curtis’ contribution worth at this stage?
The “pre-money” value ($1.1; “post-money” value ($7.7, see Exh 9).
VCs had 86% of capital)
P/EBITDA 1997 (Exh 6); assuming 50% leverage
P = $7,700
EDITDA = $629
Ratio = 12.2x
In 2001:
EBITDA = $50,192
(Increase due to 45x growth in revenues; 1.8x growth in CF margins) ROI = $18.8/$142 = 13.2% (after $135 of new equity financing)
In 2001, at Exit via IPO at
EBITDA x 12 =
$600 million X 15% = 90 4yr ROI =
EBITDA x 10 =
500
75
P/E
of 25 =
470
70
P/E
of 15 =
282
42
85%
77
74
53%
Type of Deal (the method for making money)
“Roll up” vs “Start up”
Differences and similarities (“low risk, high return”?)
Nature of risk in roll ups (operational scale/execution capacity)
Build company quickly by leveraged acquisitions (at low P/EBITDAs)
Economies of scale/cost reductions
Go public at higher multiple
Car Wash Industry Suitable for Roll up?
Low risk
High margins, “barriers to entry”, simplicity
Highly fragmented, unorganized
“Leveragable”?
“Improvable”? (by applying advanced management techniques)
“Upgradable” into more (related) services
“First mover” advantages?
Does value of improvements affect consumer?
Projections
Systematic? Credible? How do you know?
Sensitivities?
What happened to the gross margins?
Willing to use these projections for valuation?
Car Wash Partners
Management
Tom Curtis – successful entrepreneur from the past. Credible?
Curtis capable of leading major change in this industry?
No further management team as yet
Investors
Cabot Brown (Brown & McMillan)
Start up-VCs?
First deal
Who are their investors?
Bill Burgin (Bessemer Partners)
Experienced VC
Investing with a friend?
Does the investment fit their needs?
Car Wash Partners
Valuation
Who puts up the money? (BMC, Bessemer; total of $6.6)
How much is Curtis’ contribution worth at this stage?
The “pre-money” value ($1.1; “post-money” value ($7.7, see Exh 9).
VCs had 86% of capital)
P/EBITDA 1997 (Exh 6); assuming 50% leverage
P = $7,700
EDITDA = $629
Ratio = 12.2x
In 2001:
EBITDA = $50,192
(Increase due to 45x growth in revenues; 1.8x growth in CF margins) ROI = $18.8/$142 = 13.2% (after $135 of new equity financing)
In 2001, at Exit via IPO at
EBITDA x 12 =
$600 million X 15% = 90 4yr ROI =
EBITDA x 10 =
500
75
P/E
of 25 =
470
70
P/E
of 15 =
282
42
85%
77
74
53%