"The reports of my death have been greatly exaggerated," Mark Twain supposedly once said in response to an unfounded rumor that he was gravely ill. (He was actually on a successful speaking tour of England at the time - not dying in the gutter, as some rascals had speculated.)
In the wake of COVID-19, you might be wondering if merger and acquisition (M&A) activities at the tire dealership level have kicked the bucket, too. According to MTD research, rumors of that demise have been overstated, as well.
Just compare last year's MTD Top 100 list of the biggest independent tire dealerships in the United States to this year's MTD 100.
Three dealerships on our 2019 list - Raben Tire Co. (number 37 last year), Lamb's Tire & Automotive Centers (number 62) and Superior Tire and Service (number 66) - have since been purchased by bigger entities.
Raben was acquired by a tire manufacturer, Goodyear Tire & Rubber Co. Lamb's was acquired by GB Auto Service, a unit of Greenbriar Equity Group. Superior was part of an acquisition of 20-plus stores that Monro Inc. announced in October 2019.
Earlier this year, Mavis Tire made headlines when it acquired 112 NTB Tire & Service Center locations in the Chicago, Boston, Philadelphia and Atlanta markets - making it the second largest tire store chain in the country.
Other tire dealerships continued to grow through M&A. Snider Tire Inc. acquired Bluegrass Truck and Trailer in Bradenton, Fla. Purcell Tire & Rubber Co. acquired Springfield, Mo.-based Wilson Industrial Tire. Steve Shannon Tire acquired K&K Tire Barn in Tunkhannock, Pa. Jack's Tire and Oil acquired Denver, Colo.-based A&E Tire.
And the trend of tire manufacturers divesting locations continued. Pete's Tire Barns, McCarthy Tire Service and Pomp's Tire Service all acquired GCR Tires & Service locations from Bridgestone Americas Inc. since last year's MTD 100 was published. Burt Brothers Tire bought a former Bridgestone company-owned outlet in Salt Lake City.
And I'm sure more transactions have taken place. (Closer to home, MTD was acquired by 10 Missions Media in June.)
Will M&A continue through the rest of the year? For more insight, I turned to Michael McGregor, a partner at Focus Investment Banking LLC and one of North America's most prominent experts on tire dealership M&A. (He also writes a monthly M&A column for MTD.)
Barring additional economic shocks, M&A activities should "accelerate as the year goes on," McGregor told me. "Companies that have been on the sidelines will get back in the hunt once they see the competition completing deals that they wish they had done."
The most likely transactions will happen between small- to medium-sized dealerships, he believes - although he notes that there will always be larger, regional dealerships that will leap at the chance to make what he calls "opportunistic, fill-in acquistions" within current or contiguous geographies.
And don't count out private equity, which he says "is in fine shape."
In fact, private equity groups that have acquired tire dealerships "will realize that they were fortunate to have invested in an essential business - one that performed in the downturn almost in the same category as grocery stores and home improvement companies."
McGregor also believes that Monro will resume its acquisition efforts. (In late-May, the company said it was putting a temporary halt to acquisitions.) "I think by the first of the year, they're going to open the pipeline again. The stock market has rewarded them for their growth, so they will return to that path."
We'll keep an eye on all of the above, in addition to what happens with Les Schwab Tire Centers, whose owners have decided to hit the pause button on the dealership's sales - at least for now.
In the wild world of tire dealership M&A, anything can happen. And that's no exaggeration.
Questions? Comments? Contact me at [email protected]
