Focus Advisors provides 2025 M&A year in review, 2026 predictions

Focus Advisors reports 2025 was a slow year for mergers and acquisitions (M&As) in the collision repair industry, and weighs how the industry’s more permanent versus temporary trends could impact buying and selling.

“Persistent uncertainty in the collision repair industry has made it difficult for operators and investors to determine whether demand softness in 2024 and 2025 was permanent (secular) or a passing series of events (cyclical) that will eventually normalize,” wrote Focus Advisors Managing Director David Roberts. “The industry in 2025 reflected cyclical weakness and secular headwinds operating simultaneously.”

He added that 2025 performance varied widely by operator based on market positioning, direct repair program relationships, OEM certifications, and operational efficiency.

“Improved economic confidence could slow the aging car parc, reduce the uninsured rate, and encourage claims filing,” Roberts wrote. “A return to more typical weather patterns could help improve revenues. But the secular pressures — ADAS technology, total-loss frequency, and TCOR — are not reversing.”

Roberts noted that 2025 saw continued increases in total loss frequency, a “whipsaw impact” of tariff rates on parts costs, and a mild winter with fewer hail events.

“[T]he industry internalized uncertainty about both the present and the future,” he wrote. “Month after month, quarter after quarter, operators kept expecting a positive turn. Few operators realized positive gains in a disappointing revenue year.

“Shops and MSOs that maintained or grew volumes generally did so by capturing market share in a smaller pie — not by riding a rising tide. For operators, the environment demanded tighter cost management and more realistic valuation expectations. For buyers and consolidators, it required greater scrutiny and selectivity, while dealing [with] their own slowdown-induced challenges.”

M&A activity, except for some mid-sized consolidators, was slow while many prospective sellers stayed on the sidelines, valuations declined along with EBITDA, and “The Big 5” slowed down, according to Roberts.

Several mid-sized PE-backed platforms — and one privately-owned MSO — showed a wide range of growth trajectories in 2025:

“In the U.S., three new PE firms entered the sector during the year, joining the existing roster of 14 PE investors seeking exposure to the industry’s defensive characteristics and consolidation opportunities,” Roberts wrote. “For firms with patient capital and experienced management teams, the current environment continues to offer meaningful growth potential.”

He observed that several firms moved downstream in 2025 to pursue entrepreneurial operators with as few as one to three locations, as well as platforms with smaller shops.

“And then, in early November, a blockbuster event — Boyd Group/Gerber announced its merger with Joe Hudson’s Collision Centers,” Roberts wrote.

He called the merger of the second- and fifth-largest operators by store count “a spectacular event in an otherwise disappointing year for M&A.”

“By absorbing Joe Hudson’s dense Southeast footprint, Gerber became the clear regional leader in the area,” he wrote. “This acquisition materially altered market concentration, with the merger positioning Gerber as the region’s leading, contiguous platform.

“Gerber’s November transaction, however, also altered the competitive landscape overnight — and the long-standing ‘Big Five’ consolidated into a ‘Big Four.’ The Gerber-Joe Hudson’s merger represents the first large-scale consolidation move in several years and may signal the potential for additional large-scale transactions ahead.”

Roberts also noted Tesla’s expanding footprint nationwide, reaching 60 locations last year.

“With hundreds of Tesla-certified shops nationwide, owners are often influenced in their decisions by expected repair times, local and online reputations, as well as their own insurers’ DRP networks,” he wrote.

“Tesla’s expansion has created tension among independent certified shops that have invested heavily in equipment and training to earn Tesla certifications,” Roberts wrote. “Moreover, this strategy echoes a broader industry theme: OEMs are increasingly seeking to control repair capacity, certifications, and parts availability, reshaping assumptions about which shops will have access to OE parts, data, and calibration capabilities.”

This year, Focus Advisors predicts continued challenging operating performance; however, it also expects an increase in acquisitions by consolidators, private equity firms, and regional privately-owned MSOs, according to Roberts.

“Based on Focus Advisors’ proprietary deal flow, more sellers appear ready to transact, which will increase supply,” he wrote.

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Graphs provided by Focus Advisors