Paint & Panel caught up with Ray Malone in Victoria after he'd raised $45million in capital to find out what's on his shopping list.
“The smash repair industry generates billions in revenue. To be viable, we need to increase our scale in order to meet the growing needs of all parties in the consolidation space," Malone said.
With the latest acquisitions the AMA now has 28 shops, with the Woods group bringing in 14 shops. According to Malone if you haven't already grasped the opportunity in the new world of smash repair then your future may not be bright.
“There are some fantastic rural repairers where people have a niche but it's a catch 22. If you didn't get into the space at the right time then you don't have a history. If you think about the insurer – they can’t gamble on people they don't have a history with - they need everything to be correct.” Malone said.
“As insurers go into new areas there will be some opportunity for people but in general, without scale, without capacity and substance, it will be tough. On top of that, capital requirements are substantial.”
Malone believes that a solid track record is the key to success and that's what he's been building at AMA with the new team of business owners in the group.
“I didn't have certain skill sets in the "Express", space that I needed and then Phil [Munday] and I got together and he filled those gaps. As we grow, our business will endeavour to fill the needs across the space. It's all about having high minimum standards and thresholds. If you put the insurer's shoe on your foot then you see they have feirce competition and every other insurer is after the same pie. Insurers need to increase their brand share - it’s imperative to partner with the right people.
“Really the repair space is vast , there's a ton of opportunity. I believe that over the next two years the majority of the change in the marketplace will happen and then it will just flow on from there. This is a very, very good business. Will there be vertical integration in what we're doing as well? Of course there will be, it's just common sense.
“Being able to raise money and to keep the company virtually debt-free is another great benefit for us. It means safety with the ability to undertake larger expansion.
“I would say that the capital markets are behind us,” said Malone. “We raised $45million recently and we were oversubscribed by about 100%. That buys you a lot of shops, it buys you a lot of green and brownfield sites and that means that we can actually do whatever the manufacturers and insurers need.”
Malone believes that it's a win-win situation for both him and the shops that are joining AMA.
“The people we are looking to partner with are decent, honest and transparent. Many of them own the land and need a solid tennant as well.”
With mergers and acquisitions it's all about timing says Malone. “It's been great timing with Phil and with Bruce Bennett and Scott Donnely at Shipstone. Also with Dennis from Woods Group which was a coup for Victoria because straight away we picked up a minimum $33 million revenue.
“The other thing that's really important is having enough scale where you are to have value to a supplier. Deals have to be sustainable and we want service because that makes our cycle times work.
We audit the suppliers to see they are charging us the right amount. We've got a ripper system for procurement which brings huge benefits to those that join us particularly if they are on an earn out.We pay supliers in under 30 days in most cases.
Malone is, in his own words, 'cashed up' and with a national coverage business plan – what's the next step?
"We are building AMA for all shareholders and we are taking a strategic approach where we consider all parties involved and actually come up with the solutions. It is all about helping to build a quality business with good people, transparency and continual improvement.
“The reason I do this is because it is such an exciting, energetic space and we have the tools we need and we're in a sweet spot and it's just a lot of fun. The people I deal with I love and we're learning every day, it is just extraordinary I feel blessed that I can participate in it.”