Telle Tire & Auto Centers is in growth mode. The 43-store dealership, based in Webster Groves, Mo., has added 15 locations this year and is ready to “go regional” with the help of Next Horizon Capital, a private equity firm that’s acquired a stake in the company.
Next Horizon Capital, headquartered in San Francisco, Calif., describes itself as “a middle-market, growth-oriented private equity firm that focuses on investing in business services, technology and information services company” that “partners with entrepreneurs and leadership teams to enable business transformation.”
Telle Tire & Auto Centers wasn’t necessarily in need of a “transformation,” Aaron recently told MTD. But a few years ago, he recognized that the dealership could benefit from an influx of capital to accelerate its growth and update some internal systems.
Enter Next Horizon Capital
Aaron become owner of Telle Tire & Auto Centers in 2009. At the time, the dealership had one location. “Fast forward to 2023 and 2024, we were up to 26 locations,” most of which were acquired stores. “I had created a network of shop owners reaching out to me, saying, ‘I’m interested in selling my business. I’ve heard great things about you and Laura," Aaron's wife.
“One of the things that became a reality for me was, ‘We’re growing this business. We’re integrating acquisitions well. We’re keeping up with it.’ But I was also running everything on my personal balance sheet. I was running out of room (on) what I was borrowing from the bank.
“I had a decision to make: ‘Am I going to continue to grow or am I going to tell dealers who want to sell their businesses to me no?’ That’s something I had to think about and ultimately, I said, ‘I want to continue to grow our business. I believe in our organization. What we’re doing is working. And I want to continue that.’ I said, ‘If I’m going to bring on a financial partner, what does that mean for me?’”
Whatever form that would take, retaining the leadership role of Telle Tire & Auto Centers was paramount, according to Aaron. “I did not want to join just another platform. I wanted to continue to be CEO. I wanted to continue to work with my management team. I wanted to continue our philosophy and strategy.
“So I engaged with an investment bank and starting exploring. The investment bank said, ‘We can put a process together for you. You could have 25 different offers and people bidding for you.’ I said, ‘I’m not interested in getting the highest dollar. I have a long-term perspective. I’m only 42 years old. I love what I do.’ I said, ‘What this is about is finding the right partner who aligns with my values (and) benefits (our) associates, customers and the communities we work in.
“This was in April 2023. About three months later, this person called me and said, “I think I have the right potential partner that will fit that mold.’”
The partner was Next Horizon Capital, whose background and expertise intrigued Aaron. “We started to get to know each other. They started to learn about my business and I learned about them. We talked about Telle Tire’s culture, we talked about strategy and I started to feel more and more comfortable with them.”
Next Horizon Capital invested in Telle Tire & Auto Centers in April 2024, forming what Aaron calls “a special purpose vehicle,” a separate entity with its own legal status, assets and liabilities.
“The investor group for Telle came into our specific deal understanding our thesis and long-term goals. We feel we have an excellent alignment with our investor group.”
Scaling up and out
Telle Tire & Auto Centers’ partnership with Next Horizon Capital will help the dealership expand into new geographies, Aaron told MTD.
“We’ve been growing throughout the state of Missouri. We’ve been growing in St. Louis and Kansas City – sprinkling into Kansas and Illinois. This will allow us to take a more regional approach and start growing more regionally,” without feeling the pressure to “buy 150 stores just to have 150 stores and then sell them. We truly believe we shouldn’t grow just to grow. Acquisitions have to make sense for us. I don’t want an investor saying, ‘Go buy 300 stores as fast as you can.’
"Another thing I realized is that we grew really fast over the last 10 years,” but because of that, Telle Tire & Auto Centers’ field management team was stretched thin. “We also needed to make some real investments in technology. Our back-office systems needed some upgrades. Between technology and team investments, we’re talking seven figures of investments. That factored into my decision” to partner with Next Horizon Capital.
“That’s what we’ve been focusing on: building out that back-office, investing in our people and investing in our field management team. When we were smaller, I didn’t want to have a person between me and my store managers. When we had 10 stores, I could do that. When we had 26 stores, I couldn’t do that in an effective way.
“Next Horizon Capital has allowed us to scale up quicker, add a good amount of payroll, promote people from within the organization and improve and build out our supply chain,” said Aaron. “Having someone who could help us with that and put that in a lot faster that I would have been able to allows us to continue strong operations.”
Next Horizon Capital’s investment also will free Aaron to allocate his time and energy to different parts of Telle Tire & Auto Centers. “I think I will transition from a family business-oriented CEO to more of a traditional CEO, focusing on culture and strategy. Before, I was doing a little bit of everything.”
And he believes Telle Tire & Auto Centers will attract more tire dealers who are looking to sell their businesses. One of the dealerships that Telle Tire & Auto Centers is acquiring is a five-store chain in the Midwest.
“The owner reached out to me and said, ‘I’m ready to sell. We’ve heard great things about you and your business.’ We started going through the process.” While that was happening, Aaron finalized his deal with Next Horizon Capital. “The dealer called me and said, ‘What’s this all about? This is not what I want for my people and my business.’
"I said, ‘Nothing’s changing. The same people who run and operate Telle Tire will continue to operate Telle Tire. But I would have had no way to purchase your business if I didn’t have a financial partner. I structured the deal to allow us to continue to run our business the way we have all these years. I’m not going anywhere.’”
