Behind the Curtain: MidOcean Partners’ acquisition of FullSpeed Automotive

A quick sneak-peek into how the PE firm closed its recent franchisor deal.

MidOcean Partners’ acquisition of auto aftermarket services platform FullSpeed Automotive – much like other deals that wrapped up in H2 – paused during the height of covid-19 and picked up over the summer.

Although the company had been introduced to a number of PE and strategic groups over time, “no formal conversations happened until late summer,” a source familiar with the deal told PE Hub.

FullSpeed Automotive offers oil changes, brake services, car washes, tire sales and other need-based services to auto owners. The Denver franchisor was backed by CenterOak Partners in November 2017.

Since then, the business made 15 acquisitions, including Uncle Ed’s Oil Shoppe and American LubeFast – the two quick-lube service providers it bought this year. Both brands grew FullSpeed’s geographic footprint and made it the fourth largest quick-lube operator in the US.

By October, it had nearly 600 locations, including 340 franchise stores.

“We spent a lot of time looking at multi-unit concepts as part of our efforts [to grow into the aftermarket services space],” said Daniel Penn, MidOcean’s managing director in the consumer space and the deal lead for the acquisition.

The efforts included hiring Marc Graham, who had roughly 40 years of experience consulting automotive companies, to the firm’s executive board. Graham is now the chairman at FullSpeed.

“He took our efforts to the next level and it was at that time we engaged further with the company,” Penn added.

A purchase agreement was signed on November 1 and the deal closed right before Thanksgiving. The majority of the execution was over Webex Teams and Zoom with some in-person meetings, said the source.

The investment, made through MidOcean’s $1.2 billion Fund V, is its first in this sector. “Wear and tear are non-discretionary; they are not easily replaced by the Internet or Amazon,” Penn advocated, speaking from his East Hampton, New York, home office.

Golub Capital, a mid-market lending group, provided debt for the transaction. The financer also supported the 2017 acquisition by CenterOak.

“[FullSpeed] management did roll into this deal,” the source said. Although financials of the transaction remained undisclosed, high-performing assets in this space tend to trade at low double-digit multiples – 11x to 13x EBITDA, according to the source.

MidOcean’s website states the firm targets companies with enterprise values between $100 million and $500 million, with minimum equity contribution of $25 million. The FullSpeed deal fell within this range, Penn confirmed.

Harris Williams was the financial advisor to FullSpeed Automotive, and Honigman LLP acted as legal advisor to MidOcean.

Looking ahead, the PE firm will continue to build on more franchises, build new locations and aim to drive performance in existing stores.

“It was a logical exit; CenterOak achieved its five-year goals in the three-year hold,” the source said.