Private Equity: What to Know Before You Sell (Or Scale) 

This is an historic time for the automotive aftermarket where private equity (PE) firms are deploying record-breaking capital. While Wall Street once ignored small business owners like us, today thanks to roll-ups, recurring revenue models, and platform plays, you’re the new target. 

The truth is that most shop owners don’t understand private equity. Even worse, many get taken advantage of. 

I’ve been in this business for nearly four decades, and I’m now leading one of the largest independent auto service consolidations in the U.S., The Houston Boston Partnership (HBP). We’ve grown to more than $80 million in annual revenue, with a proven playbook that’s now attracting serious investor attention. 

This article breaks down private equity in a way that speaks your language. No fluff. No banker lingo. Just the facts and a roadmap. 

What Is Private Equity? 

Private equity funds are investment firms that buy businesses, grow them fast, and sell them for a profit. 

Each fund typically lasts 10 years: 

• First 6 years: Buy companies (using investor money + loans) 

• Last 4 years: Grow fast and exit (to another buyer or public market) 

The money comes from: 

• Limited Partners (LPs): Wealthy investors, pensions, endowments 

• General Partners (GPs): The PE firm that calls the shots 

They make their money through a 2% management fee, and by taking a 20% cut of all profits from the businesses they grow and sell (called “carried interest”). 

Why Are They Interested in Auto Repair? 

Here are the primary things private equity firms look for: 

• Needs-based businesses (like brakes, not luxury watches) 

• Recurring or repeatable revenue 

• Low capital requirements (CapEx) 

• Large, fragmented markets with no dominant player 

If all that sounds familiar, it should. Auto repair businesses check every box, and with more than 250,000 shops nationwide and no clear #1, this industry is ripe for consolidation. 

The Playbook: Buy & Build (aka Roll-Ups) 

Here’s how the game works: 

1. Buy 10 shops at 3–5x EBITDA 

2. Combine and systematize them into one platform 

3. Sell the platform for 10–14x EBITDA 

That’s called multiple arbitrage—and it’s the name of the game in PE. 

Platform vs. Add-On 

If you’re a large, well run shop or a multi-location business, you could be a platform for the flagship company that anchors the roll-up. This comes with higher valuation and more responsibility. Smaller shops are often add-ons tucked into an existing platform. Still valuable, but with less pressure. 

At HBP, we’ve built a hybrid model where we pre-integrate the add-ons before the transaction, so everyone wins. 

Pre-Integration Before the Deal 

Most PE firms close the deal first then scramble to fix operations, culture, systems, and financials. We flipped that script. 

Through our platform company AutoShop Answers, we provide: 

• National call center (Auto Shop Callbacks) 

• Dedicated recruiting team (Auto Shop Recruiting) 

• World-class training (Key to Key to Callbacks Advanced Business Program)

This model costs $10,000/month per unit, but it creates massive upside. We believe this cost qualifies as a valuation add-back, meaning it doesn’t reduce EBITDA but instead enhances exit value. We also charge a 10% NOI performance fee that covers full optimization ensuring your store isn’t just running, it’s ready. 

Ready for the transaction. Ready for scale. Ready for what’s next. 

In addition, HBP will receive 10% of company stock at the time of transaction, converted directly into HBP equity reflecting our role in building, optimizing, and positioning the business for a successful exit. 

The Movement Begins 

On May 20, 2025, we hosted the first HBP Private Equity Roadshow & Owners Summit in Houston. The room was packed with elite shop owners, with most of them asking the same question. “How do I scale, sell, and protect my legacy?” 

Adam Coffey, author of “The Private Equity Playbook,” summed up the urgency. “If you’re not thinking like a platform, you’re already falling behind.” 

Second Bite of the Apple: Rollover Equity 

When you sell, you can take all your money off the table or roll a portion (typically 20–30%) into the new platform. This is where true wealth is built. One operator rolled $4.4M and exited a few years later with $17.6M from that rollover alone plus the $12M he got up front. 

Private equity isn’t about one check. It’s about compounding value over time. 

When Should You Sell? 

Here’s a simple formula to help assess your situation. Take your age and add it to the percentage of net worth you have tied up in your business. If that number is greater than 145, it’s time to think about liquidity. 

Private equity not only offers immediate cash, but it also gives you rollover equity for future upside as well as resources to scale like never before 

Final Thought: Don’t Be Late to the Table 

Private equity isn’t coming, it’s already here, and if you don’t understand it, you can’t benefit from it. Whether you’re ready to sell, scale, or simply get smart about your options, there’s one thing you can be sure of. This industry will never look the same in five years. 

If you play it right, that’s the opportunity of a lifetime. 

Joe Adams, CEO of Adams Automotive and Co-Founder of Houston Boston Partnership, contributed to this story.