Cobblestone

Case Study

Key Details

Status: Current

Industry: Car Wash and Automotive Services

Theme: Essential Service / Do-it-for-Me

Initial Investment: 2020

Add-On Acquisitions: N/A

Headquarters: Phoenix, AZ

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Investment Thesis Highlights
Access Holdings identified the car wash industry as part of its thesis that a fundamental shift in consumer preferences is occurring with consumers, particularly millennials, shifting from the do-it-yourself (DIY) behavior to do-it-for-me (DIFM) consumption habits and are demanding speed and convenience.

An attractive component of this trend is the rapid and prolific adoption of the subscription /membership model for consumer services, which recently was adopted by the car wash industry and supported by the growing popularity of the express model car wash.

Access chose to focus its buy-and-build car wash investment strategy on the express model, which offers consumers a compelling value proposition with essential service demand characteristics. Overall the industry displayed multiple key investment characteristics:

  • Highly fragmented industry: Over 64,000 car washes in the U.S., of which the vast majority are privately independently owned and operated.
  • Limited scaled asset availability.
  • Homogenous location profile to execute a buy-and-build strategy.
  • Economic cycle resiliency.
  • Operating leverage with scale.
  • Strong unit level return on investment (ROI).

Access identified Cobblestone Auto Spa (“Cobblestone”) as a unique investment opportunity after nearly two years evaluating the car wash industry, and completed a partnership in January 2020. Cobblestone offered Access an opportunity to partner with best-of-breed operators alongside a differentiated, leading car wash platform that has thrived in one of the most competitive markets in the U.S. Access and Cobblestone have developed a shared point-of-view of future growth opportunities and a compelling vision for the business.

Value Creation
Through the partnership, Access has implemented multiple value creation initiatives at Cobblestone to drive growth, improve capital structure, and expand into new markets.
  • Capital structure expertise: Implemented a new purpose-built credit facility which includes incremental committed capital to support new developments and strategic acquisitions
  • Accelerated de novo strategy: Addition of new resources and capital allows Cobblestone to aggressively pursue new development opportunities in both Phoenix and new geographies supported by new research and analytic capabilities
  • Geographic expansion: Provided support to expand existing footprint into new markets
  • Human capital development: Supplemented the business with additional corporate functions such as FP&A and corporate development to ensure the Company has the necessary capabilities available to be a preferred acquiror
  • Developed M&A toolkit: Provided the Company with best-in-class acquisition toolkits to pursue strategic acquisitions and partnerships

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