Stephen Quinland, Paul Westart·June 3, 2024

Rolling Up EBITDA and Rents with Auto Repair Shops | Stephen and Paul Interview

Stephen Quinland (ex-GE and Caesars corporate development) and Paul Westart (ex-Merrill Lynch, Robert Wood Johnson endowment, Columbia MBA) are co-founders of a self-funded auto repair rollup based in Boise, Idaho. Starting in April 2022 with the platform acquisition of Blue Wrench (two locations, ~$2.5m revenue), they have grown to five locations across Idaho and Utah by episode date, with aggregate revenue in the high seven figures. Their core thesis is that fragmented independent auto repair shops in high-growth Mountain West geographies trade at 2-3x multiples due to EV fear, yet have long tails and consolidation upside. A key structural innovation drives much of their story: having exhausted their SBA 7(a) capacity on early deals, they discovered the SBA 504 Green program, which sits outside the $5m cap and allows them to buy real estate at 5% down with ~7% rates, then layer a 100% seller-financed business note on top — positioning them as the only viable buyer for owners who want to exit both their real estate and operations simultaneously. On the operational side, they systematically raise customer labor rates 30-40% and implement professional shop management software on day one, generating immediate 10-20% throughput improvements, and have achieved zero voluntary technician turnover by investing in compensation, benefits, and career growth that independent shops rarely offer.

Deal facts

purchase price: ~$3m (Blue Wrench illustrative example: $2m real estate + $1m business)
multiple: 2-3x (typical for the industry; Blue Wrench at roughly $2.5m revenue)
revenue: High seven figures aggregate across five locations; Blue Wrench grew from ~$2.5m to $3m+ in year one
financing structure: First deal (Blue Wrench): SBA 7(a) including real estate, ~10% equity (~$300k total, ~$150k each); subsequent deals: SBA 504 Green program for real estate (50% lead bank, 40% SBA debenture, 5% equity/seller note) + 100% seller note on business at ~6.5% interest with 25-year amortization and balloon
notes: Five locations total by episode date (two under Blue Wrench banner in Boise, Eagle Auto Repair, G&R Diesel in Utah, fifth closing imminently). Subsequent acquisitions funded from portfolio cash flow, no additional equity raised. Each partner contributed ~$150k for first deal.

Why this business

They chose auto repair because it is fragmented (top 50 players hold ~10% of revenue), consistently offered businesses for sale in the Mountain West, trades at 2-3x multiples due to EV headwinds that they believe are overstated, and has simple enough operations that two finance professionals with no mechanical background could run it by building strong management and technician teams.

What's working

Raising labor rates (billing rates to customers) by 30-40% at acquisition, immediately lifting revenue while also funding above-market technician compensation and recruiting
Implementing professional shop management systems that increased throughput 10-20% from day one versus pen-and-paper or underutilized prior systems
Targeting Mountain West geographies (Boise MSA, Utah) with strong demographic tailwinds, making technician recruiting far easier than coastal markets
Zero voluntary technician turnover achieved through above-market pay, medical benefits, Simple IRA match, capital reinvestment in shop equipment, and career progression paths
Novel financing structure: SBA 504 Green loan for real estate (outside the $5m 7(a) cap) plus 100% seller-financed business note, enabling rollup at low blended interest rates with minimal equity
Being the only buyer willing to acquire both the real estate and the business together, giving them leverage to negotiate favorable seller note terms
Portfolio diversification across heavy-duty fleet, light-duty diesel, and passenger cars hedges monthly revenue swings
Subsequent acquisitions funded entirely from portfolio cash flow with no additional outside equity

What's hard

First deal (Blue Wrench) used SBA 7(a) to include real estate, burning a large portion of the $5m SBA capacity and limiting further rollup ability until they discovered the 504 Green structure
Put 10% equity down on Blue Wrench (~$300k) instead of using a seller note for half; would have preferred 5% down plus seller note
G&R Diesel diligence miss: prior owners represented themselves as front-desk only but were actually performing the majority of vehicle diagnostics, creating a rocky transition when they departed
Day-one key employee risk: Blue Wrench foreman threatened to quit on closing day; required significant relationship effort to retain
Rising interest rates (prime from ~3.5% in April 2022 to ~8.5% by recording) made conventional and 7(a) loans near-unworkable for new deals, forcing the structural innovation
Scaling from five to ten locations will require significant back-office infrastructure investment currently handled by Stephen and Paul personally
Analysis paralysis warning: both guests note the temptation to search endlessly for the perfect deal rather than getting into the industry and learning from the inside

Notable quotes

I had taken an entrepreneurial acquisition class in business school and the concept really resonated with me — this idea that you could go out buy a business run it yourself have all types of control over it and so when I pitched it to Stephen I said look why don't we go out and buy a business trades at two to four times multiples we can make them pencil and he said sounds great where are we going to come up with the money I was like I've got the answer it's in the form of the SBA.

I think because of that you've got some pretty competitive valuations in those so we pick you can pick them up at two to three times pretty routinely and I think sellers are open to that type of multiple and are realistic about the prices they're going to sell for and a lot of the deals we've looked at even the ones that aren't off market we're just not paying premium multiples and there's no sellers — there's no, I don't know that there's many people actually competing with us as we look at these other shops.

We went into blue wrench and it did probably somewhere in the neighborhood of 2.5 million the year before we acquired it and Stephen and I looked at ourselves and said look we've got no experience this is brand new you know let's be conservative in our underwriting and I think we bogied that thing to do roughly 2.3 million and we ended up cresting the one-year mark at 3 million.

The truth is I would struggle to change my own oil and in many ways it's one of our main advantages — I think for us it forces us to hire really good competent people.