Envest Private Equity via its Authentic Auto Body platform will close on a second acquisition within a few weeks -- call it early January -- making Authentic a true MSO, according to both companies.
Envest is in Virginia Beach, VA. Authentic Auto Body is in Holliston, MA.
The former bought the latter Aug. 29, as a vehicle for further expansion.
Envest cofounder Patrick Keefe and Authentic operator Steve Proia spoke with Autobody News via Zoom.
Second Acquisition Follows Envest’s Equity Entry into MA
Envest was founded 30 years ago as a venture capital firm and stopped investing in 2012, Keefe said. He came to Virginia from Boston a few years later, talked with one of the founders, a family friend, and relaunched it as a private equity firm in 2016.
Patrick Keefe.
The earlier stage investing of its initial iteration and the relatively later outlook of private equity makes for an interesting hybrid.
“We go a little bit smaller, not as much scale, more risk,” Keefe said. “So it’s back to best-in-class operators … sustainable positive cash flow, not deploying our own operating team.”
Coming at an earlier equity buy-in means it’s their opportunity to grow the MSO.
“We came from growth equity, and can understand [the] story,” he said, “investing in people, holistic analysis.”
Coincidentally -- or serendipitously, depending how you read it -- Proia took over Authentic Auto Body the year Envest relaunched. That odd aligning continues by being about the same age -- Proia is 39, Keefe 40 -- with the same birthday.
“I know a lot of the industry,” Proia said. “It’s older, complacent -- we are young and hungry, [doing] OEM certifications, following procedures.”
It’s an outlook that integrates with what Keefe said he and his partners want to do, no matter the age of the facility. It could be a “young gun” like Proia -- he and his wife Gabrielle have three small children -- or what is happening industry-wide with older shops and older owners meeting new technology and business practice.
Envest bought from its third fund, Keefe said. It has made nine platform and nine add-on acquisitions across “core economy and service business, augmented by technology but not subject to disruption,” Keefe said.
Authentic Doing Well, Looking to Do Better -- And More
That’s a perspective that’s going to grow its influence in collision repair centers, the duo believes. People are always going to need it, you can’t outsource painting to developing markets, and technology -- already here, and inexorably growing -- set, over time, to improve industry practices, not to mention its bottom line.
Proia has 25 years in body shops, starting in his early teens. He graduated from trade school in 2003, and had managed several shops when the chance to get his own place came.
He bought Authentic in 2016 from a solo owner-operator after, he said, being fired from his previous job for asking about overtime and benefits for himself and some second-language learners also working there.
Authentic Auto Body was then averaging a car a week and had annual revenue of $100,000, Proia said.
“Our first month we did $100,000,” he said. “I knew what I could do.”
The 2,000-square foot shop tripled in size 18 months later, then “quickly outgrew that.”
Proia bought a building in 2021. The shop is 14,000 square feet with a dozen employees.
“There’s no DRP, no insurance referral list,” he said. “We like to have the authority to repair the car properly.”
Revenue was $6 million in 2023, the same year Authentic made a state "Top 10" list.
Keefe and Proia started talking.
‘Mass Market’ Takes on Multiple Meanings in MA
Proia said he “understood the auto body industry, and knew what was coming to Massachusetts specifically.”
Keefe eyed the joint and saw the “operators aging out of a fragmented” market, not uncommon these days.
There more than 100 shops in and around the Boston metro area, alone, according to one searchable site.
The largest -- indeed, only -- multi-state MSO in Massachusetts, VIVE Collision, has six sites. Focus Advisors said the largest independent MSO, Hynes Auto Repair Corp., has the same.
Steve and Gabrielle had by 2023 some other investments, the three kids -- she’d been pregnant with their first when he bought Authentic seven years earlier -- and a desire to, as the finance folk say, “de-risk the personal.”
“A business is where the wealth is,” for sellers, Keefe said, and owners are “not willing and ready to take the same risk” as investors.
Keefe said Envest likes buying just the one to start with, to aim more at culture -- training, market rep -- than accretive earnings. This can include smaller shops with a handful of employees and perhaps not even $1 million in annual revenue. A buy might take a year to complete.
“We’re proving out the strategy, making sure we have the personnel, getting the team and integration right,” he said. “We want to be thoughtful about how we structure transactions … we’ve got support for acquisitions.”
Paul Hughes