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Confessions of a Shop Owner is hosted by Mike Allen, a third-generation shop owner, perpetual pot-stirrer, and brutally honest opinion sharer. In this weekly podcast, Mike shares his missteps so you don’t have to repeat them. Along the way, he chats with other industry personalities who’ve messed up, too, pulling back the curtain on the realities of running an independent auto repair shop. But this podcast isn’t just about Mike’s journey. It’s about confronting the divisive and questionable tactics many shop owners and managers use. Mike is here to stir the pot and address the painful truths while offering a way forward. Together, we’ll tackle the frustrations, shake things up, and help create a better future for the auto repair industry.
Jesse Jackson [00:00:00]:
But that gap on the table, that 9 or 10x between what private equity is getting in between what the shop owner is getting is literally like the difference between a shop owner being able to retire, live their life, how they want to live it, versus eking out of retirement and worrying about whether they take Social Security at 62 or 65 and how long they can make it. The following program features a bunch of doofuses talking about the automotive aftermarket. The stuff we or our guests may say do not necessarily reflect the beliefs of our peers, our sponsors, or any other associations we may have. There may be some spicy language in this show, so if you get your feelings hurt easily, you should probably just move along. So without further ado, here's your host, Mike Allen, with Confessions of a Shop Owner, presented by techmetric, the best software in the history of ever.
Mike Allen [00:01:01]:
So the throne story is I was at a Continental ride and drive event in Uvalde, Texas. I got there a day early and it's right on a little downtown river area. And across the street from the hotel was this commercial building. It had a rooftop bar. It's a beautiful day. So I was going to go to the rooftop bar and have a drink or two. And I got there and it was dead. It was me and one other dude who was also there for the same event and just chatting it up.
Mike Allen [00:01:27]:
And people started to filter in and it took about an hour for us to realize that we were in a drag bar and they were about to have their event for the week on that night. And so that throne that's in the logo was the master of ceremonies throne during the drag show?
Jesse Jackson [00:01:45]:
Yes.
Mike Allen [00:01:46]:
And so I was like, well, I gotta get a picture on the throne before the show starts, right? So he took a picture of me in the throne. And that was three years ago before this was ever born. So I didn't know that I was creating the logo for a podcast until much later.
Jesse Jackson [00:02:02]:
That's awesome.
Mike Allen [00:02:03]:
You heard it here first. I love a good drag bar.
Jesse Jackson [00:02:09]:
We haven't really met. I've just, I've seen you around, so I'd love to hear a bit about you.
Mike Allen [00:02:14]:
Oh, gosh. So third generation in the industry. My grandfather opened his business in 1937 and the house was attached to the back of the business. It was a general store with like the potbelly stove and the in the grocery store and all the old men in the neighborhood. They were old men for me because by time I came along, you know, they had been there for 50 plus years. It was the feedlot it was the auto repair facility for the community. It was in a little community called white cross, north carolina.
Jesse Jackson [00:02:46]:
Oh, my gosh. Yeah.
Mike Allen [00:02:48]:
And so my dad grew up there, and he had no interest in the family business, and he went away to college. College didn't work out for him because he got married and had kids and needed to support family. And he ended up getting pulled back into the industry. But he didn't work for his dad for long. He ended up going to work for another gentleman who had a few stores in a town nearby, chapel hill, and he ended up buying one of the stores from that gentleman. And I grew up in dad's store. You know, as a little kid, I was in my grandfather's store because we lived in a single wide trailer next to my grandfather's store, right. And so I would get off the bus and go into my grandfather's store and hang out.
Mike Allen [00:03:29]:
But when I was old enough to start busting tires and changing oil and taking out the trash, I went to dad's store and I hated it and didn't want to be in the business, so I went away to college and
Jesse Jackson [00:03:40]:
beating the sins of your forefathers.
Mike Allen [00:03:42]:
I know. And college was not for me, and the party was totally for me. And mom and dad paid for the first year of college, and then I worked multiple jobs to go to college for four more years so that I could keep the party going. And I'm still a first semester junior to this day, so.
Jesse Jackson [00:04:00]:
All right.
Mike Allen [00:04:02]:
Higher education and my priorities did not exactly meet up super well. So eventually, in 2001, I came back to death.
Jesse Jackson [00:04:11]:
What did you study for five years?
Mike Allen [00:04:13]:
Motorcycles, whiskey, marijuana, women, skiing.
Jesse Jackson [00:04:18]:
Okay.
Mike Allen [00:04:21]:
I think when I finally dropped out, I was so. Appalachian state has a good teaching school, so I was flirting with teaching. By the time I finally dropped out teaching what? I had, like, prerequisites in my mind. I was going to be a u. S. History teacher because I love u. S. History.
Jesse Jackson [00:04:36]:
Okay.
Mike Allen [00:04:38]:
But, you know, I have zero concept of what it actually means to be a teacher. Other than that, I'm not sure I could do it. Now, seeing kids these days. Kids these days, the amount of patience involved has got to be astronomical. And the average kids. Yeah, I got three.
Jesse Jackson [00:04:56]:
Oh, yeah.
Mike Allen [00:04:57]:
15, 13, and 11. But the adversarial relationship that I've seen between teachers and parents is frightening to me because I feel like we should be alongside the teachers to help build functional members of society from our children. And so often you're like, oh, my little johnny's perfect. He never does anything Wrong. You're just not a good teacher. And I feel a little bit like that's. It's a thankless job. It seems like in North Carolina, they're also very poorly paid.
Jesse Jackson [00:05:31]:
Well, it's a setup for failure because I have seven kids. You pull up and you sit in this little seat that you're too small for, and then the teacher tells you everything, everything that's bad about you that they see in your kid. So, yeah, it's a setup for failure.
Mike Allen [00:05:51]:
I don't know. I mean, I think so. My frame of reference for the educational experience is unjustly skewed because when we were about to have our first child, Amanda, my wife said, hey, I want the kids to go to private school. And I said, kids don't need to go to private school. I went to public school and it went fine. He said, mike, you went to public school and then you dropped out of college.
Jesse Jackson [00:06:17]:
Touche.
Mike Allen [00:06:18]:
And. And I was like, but I mean, think about how much a good private school costs. And she said, there's a. I mean, we have the means to do it. And my wife is not sarcastic, she is not snobby at all, but she knows how to get a jab in when it's going to make a point. She said, mike, when you go to work, people say, hey, Mike, when I go to work, people say, excuse me, Dr. Allen, I went to private school. Our kids are going to private school.
Mike Allen [00:06:47]:
So I laughed and we did that. But they've been in the same private school since kindergarten. And actually my oldest, my 15 year old is going to be a rising 11th grader, and he's leaving the private school to go to a public early college trade school, and he's gonna. He's going into their welding program. So it'll be half the day is core curriculum at an advanced level because it's a magnet school, and half the day is welding taught by the community college instructors. And so, you know, he came to us and intelligently articulated that four year college would be wasted on him because he hates sitting still in a classroom and he doesn't want to sit in an office. He doesn't want to own a business. He wants to work with his hands and fix things.
Mike Allen [00:07:37]:
Well, okay, But I still want you to maintain options. I want you to have the option to change your mind. So you still have to maintain academic excellence. And he's done that. So we're pursuing that for him.
Jesse Jackson [00:07:51]:
All right. Yeah, the trades are hot. They're coming back.
Mike Allen [00:07:54]:
Yeah. The pendulum has swung in the other direction. Because now all, all the folks that went and got their $100,000 student loan to get a four year degree in French literature are being replaced by the AI wave.
Jesse Jackson [00:08:07]:
My daughter spent her last two years in high school working part time in a mango shop.
Mike Allen [00:08:13]:
Nice.
Jesse Jackson [00:08:14]:
And she loved it too much. Then she went to a semester of college and then she said, mom, I know you're not going to like this, but I'm going to take a semester off and I'm just going to work. So she's back in an automotive shop. I don'. I don't quite get it. Like, you were having fun hanging out with your friends in college. I don't know how you think this
Mike Allen [00:08:33]:
is better, but I think the personal responsibility that is thrust upon you when you go to college, a lot of kids thrive and they become adults and a lot of kids crash. And then the boomerang kids, they're just not ready for it yet. And that's okay. They don't have to be ready yet. But the emotional intelligence to realize that it's not for them and to pull the plug before they've got $100,000 of student loan debt or they've used $100,000 of your money for an education they're not taking seriously. I think it makes sense.
Jesse Jackson [00:09:06]:
Well, she has a great first semester and she says she's going back next semester, so I don't. Knock on wood. It's not that I like, I really respect what your son did. It's not that I don't think that there's another path for her. And if she was super passionate about going in a direction, a thousand percent support that, whatever that direction is. And I love how you're thinking about, like, your kid having optionality. Right. But I, she doesn't have that same.
Jesse Jackson [00:09:37]:
Well, at least she hasn't expressed me that same drive toward another path.
Mike Allen [00:09:45]:
We're almost 10 minutes in. I think now it would be appropriate to introduce yourself since we talked about me for the. Are you my therapist? What's going on?
Jesse Jackson [00:09:52]:
I thought we hadn't started yet.
Mike Allen [00:09:53]:
No, just. We're just talking. So this is. Seriously, this is how I start almost every episode. I just hit record and we just keep chatting and eventually we do introductions sometime after, like the second AD break.
Jesse Jackson [00:10:06]:
Perfect. I'm Jessie Jackson. I'm a mother of seven and I used to be able to say I also had seven automotive repair shops, but we have eight automotive repair shops now.
Mike Allen [00:10:18]:
So you have 15 kids.
Jesse Jackson [00:10:18]:
I'm not gonna have an eighth child, so that will never Happen again.
Mike Allen [00:10:23]:
That ship has sailed.
Jesse Jackson [00:10:24]:
Yes.
Mike Allen [00:10:25]:
Well, I mean you have 15 then.
Jesse Jackson [00:10:28]:
Something like that. Yeah. Someone's always crying. Isn't that the truth.
Mike Allen [00:10:32]:
How did you find yourself in the automotive world?
Jesse Jackson [00:10:35]:
I like you. My one of my grandfathers had a hitch shop and the other one had an aviation repair shop that I hung around in. So I think there's something like that molds you even though you don't realize it is like I never saw myself in brick and mortar automotive, but I certainly felt comfortable in the back of a shop. And I used to be an environmental engineer. The bottom sort of fell out of that market with the 2007, 2008 crash and I moved into software products like B2B softwares. And I happen to fall into a project which was in the automotive space. So I knew a ton about the space. So when we got bought by private equity, I saw a huge opportunity in the brick and mortar automotive space.
Jesse Jackson [00:11:24]:
This was 20. The stats at the time were 6 out of 10 owners are retiring in the next 10 years and they don't know how they're going to do it. And most of them don't have a secession plan. So really just leaped into brick and mortar automotive repair. And so we've grown from 0 to 17 million in the last four years.
Mike Allen [00:11:46]:
That's awesome.
Jesse Jackson [00:11:46]:
It's been a fun ride.
Mike Allen [00:11:49]:
So is your growth model because your company are the guys that are walking around all the trade shows with T shirts that say we buy shops. Right.
Jesse Jackson [00:11:58]:
It's so funny to hear you say that like oh, your company. I'm like yeah, that's just me and Brian and Kevin, just the three of us. But yes.
Mike Allen [00:12:08]:
Well, I mean it works. And at this event we're at tectonic 2026, we're wrapping up, we're in the final afternoon. You've got a dude in a blow up mango suit walking around.
Jesse Jackson [00:12:17]:
Oh yeah, Yesterday he was here for fun, just for whimsy.
Mike Allen [00:12:23]:
Well, and no sign or anything on him what he is. But I felt like you guys are just kind of hanging out and people who would come up and it's a conversation starter and you're reading the badge. Is that an owner? Where's the shop? So is that a recruiting low key recruiting methodology to find your next. Find your next acquisition?
Jesse Jackson [00:12:40]:
You know, it's more like just a attention getter for people who are looking for us. So we did. Tech Metric invited us to speak, which we'll see if they regret now.
Mike Allen [00:12:56]:
But when did you talk?
Jesse Jackson [00:12:57]:
We spoke yesterday. Apparently our session was the Most registered session, or at least that's what they told us. Maybe they told everyone that.
Mike Allen [00:13:05]:
What was the title?
Jesse Jackson [00:13:06]:
Oh, good question.
Mike Allen [00:13:08]:
What was the subject?
Jesse Jackson [00:13:10]:
It was. I mean, the title was something about, like, growing your automotive repair empire from zero to eight figures. Just what we've done. And. And I think the subject matter was both, you know, two topics. One, growing through acquisition, which has to happen. There's 50,000, 40 to 50,000 shops that are going to close their door in the next three years. So that's on us to sort of step up and do those acquisitions and let the people who have been holding up our industry for the last 30 years retire and move on to their next phase of life.
Jesse Jackson [00:13:42]:
And then sort of the second piece to that is, okay, once you own an automotive repair shop, like, what makes it grow? So oftentimes we'll take over a shop and see 100% growth in 12 to 18 months, and then we sort of steady out at a 30 compound annual growth rate, like inside of the shop. So we had less than an hour, but we tried to hit all of those points. Yeah.
Mike Allen [00:14:05]:
So I think about where I've, like, I've run into Brian a few times at different events. I think the first time I saw him was at the Tool and Equipment association meeting, Arizona somewhere. I don't remember. And I think at the time. Were you guys working together already? This was like, three years ago.
Jesse Jackson [00:14:26]:
I don't know. What year was it like?
Mike Allen [00:14:28]:
It was 21, 22, probably. He had, like, really big dreams of. Of massive growth. So maybe that was right after you.
Jesse Jackson [00:14:34]:
Oh, that was probably right after I sold him into partnering with me, which he may or may not regret.
Mike Allen [00:14:41]:
But I mean, seriously, you know, 0 to 17 million in just a few years is pretty, Pretty dang impressive. Where. Okay, so that's five years, 21 to now. What does it look like in 31?
Jesse Jackson [00:14:52]:
I'm sorry, and 30.
Mike Allen [00:14:53]:
What does mango look like in 2031?
Jesse Jackson [00:14:56]:
Oh, in 2031. Another five years from now? Yeah, that's a good question.
Mike Allen [00:15:03]:
Are you allowed to say. Do you not want to share that publicly?
Jesse Jackson [00:15:05]:
It's just that five years is. It's a difficult timeline to predict. Like, I think by our very nature, like, we're moving so rapidly, it's sort of hard to see that far down the pipeline. I'll tell you what we're working on, which we, you know, sort of. That we talked about yesterday as well. It's like we have this first passion, which has been helping shop owners retire. And the second shop that we ever acquired. We acquired from a guy named Mike.
Jesse Jackson [00:15:38]:
And Mike's shop was downtown Albuquerque. You ever been to Albuquerque?
Mike Allen [00:15:43]:
You came very artsy town.
Jesse Jackson [00:15:44]:
Yeah. No, no, that's Santa Fe. Don't get it mixed up, okay? Albuquerque is a very breaking bad town, okay?
Mike Allen [00:15:53]:
Everybody needs a little crack in their life.
Jesse Jackson [00:15:55]:
Do we? So at that shop, it's just. It's a little rough, right? So there's a big homeless population. But Mike was the kind of guy who. A homeless person would come by the shops and he would not shoo them away. He would invite them in and make them a cup of coffee. Like, that's the kind of guy he was. And we bought his shop for a 3x. And after we had done the acquisition, Mike called us up.
Jesse Jackson [00:16:23]:
He was like, jesse, Jesse, like, I want to take you to dinner. Okay, Mike, let's go to dinner. Let's sit down at dinner. I'm like, mike, have you missed it? Like, you own this business for 30 years. Your dad owned it for 30 years before you. And Mike said, you know, I thought I was going to, but I just really haven't had time. Okay, Mike, what are we at dinner about? Why. Why'd you call this dinner?
Mike Allen [00:16:44]:
He said, what's the pitch?
Jesse Jackson [00:16:45]:
This is the one year anniversary of the day you first called me. And I had been praying that someone would call me to buy my shop so that I could spend more time with my family. And that really stuck with me and became. I think it sort of changed how I was thinking about what we were doing and to, like, I'm not here to convince anyone to sell their business to me, but I'm just here for the mics of the world who want to go spend time with their family. But as we did acquisitions, we encountered, like, another kind of shop owner. And it was, you know, the Mike who, unlike we should give him another name. The Chuck who, unlike Mike, who retired on that three x, who we give evaluation to like, this is what your business is worth. And they look at that number and think, I am dying at this desk.
Jesse Jackson [00:17:44]:
I'm gonna die with a wrench in my hand because I can never afford to retire for that number.
Mike Allen [00:17:49]:
There's a lot of those.
Jesse Jackson [00:17:50]:
Add Social Security. So we started thinking about, how can we help that person? Because for the last three or four years, when Brian and I meet with them, we just say, you know, I hope this was helpful to you to learn how businesses are valued. Now you have the tools to make your business more valuable. Happy to help. Call us up at any time. You know, we're friends, like, thanks for taking the time, but I can't offer you what you need to have. And so I think this next round of Mango is about helping that Chuck or that shop owner who wants to exit their business but needs a bigger multiple to do it.
Mike Allen [00:18:30]:
How many individuals do you tend to speak with before you find another realistic acquisition end? Like for me, when I was trying to find another shop and I have a very defined geographic area that I'm looking at. I'm not, I'm not looking in other markets. I would talk to 10 or 15 before I. And they all had, you know, little to no documentable net profit. And they all thought it was worth a million dollars. Right.
Jesse Jackson [00:18:56]:
Everyone's number. Every shop's worth a million, forgetting to adjust for inflation because it was worth a million five years ago and they still want a million. They need more.
Mike Allen [00:19:07]:
So how many are you talking to before you find one that it's like, we should put an offer on this one.
Jesse Jackson [00:19:11]:
Those are pretty good numbers that you have. 15 or 20 only I think that we, you know, it's one to three out of a hundred.
Mike Allen [00:19:19]:
Wow. Okay, well, so that means that you guys. 90% of what you do is, is vetting those, those situations in those businesses or what does your day to day life look like within Mango?
Jesse Jackson [00:19:36]:
Good question. So Brian and I used to do everything, but now we have a whole corporate team who does finance. We have a district manager, we have hr. HR was our first corporate hire and it was a huge relief, especially for Brian. So I oversee our marketing and I run acquisitions. Basically those two things.
Mike Allen [00:20:00]:
Geographically, are you spread out far or are you all pretty well, densely?
Jesse Jackson [00:20:05]:
Yeah, with the exception of one shop, we can drive to all of our shops and about four and a half hours from our home base.
Mike Allen [00:20:14]:
And home base is where?
Jesse Jackson [00:20:16]:
Albuquerque.
Mike Allen [00:20:16]:
Okay. Yeah. But I feel like on my social feeds I'm seeing some of your branding and marketing because you're very much leaning into the female owned and operated auto repair business that is Mango that I've been seeing those ads on on socials. Right? No.
Jesse Jackson [00:20:35]:
I don't know.
Mike Allen [00:20:36]:
You don't know? Maybe.
Jesse Jackson [00:20:37]:
I. I didn't run this.
Mike Allen [00:20:41]:
I feel like it was. Man, I should. I should have found one of them to have pulled up.
Jesse Jackson [00:20:49]:
I'd love to see it.
Mike Allen [00:20:50]:
I don't do it. I don't do any show prep. I'm terrible.
Jesse Jackson [00:20:53]:
What are we advertising?
Mike Allen [00:20:55]:
I think you're just selling partnership. What I recall, and I might be misremembering. I do a fair Amount of that is that you were selling the dream of partnership and being part of something bigger and having your shop being part of a group of shops that are led.
Jesse Jackson [00:21:13]:
I think perhaps you're seeing into the future because we have not run those ads, but I think it is on the docket this summer.
Mike Allen [00:21:23]:
Are you thinking about any ground up builds or is it all acquisition at this point?
Jesse Jackson [00:21:28]:
We have thought about some ground up builds especially. You're familiar if you're in one market, you know the locations that would be hot if you did a build that there. But we always perform in them out and then we're like, makes more sense to acquire something that's already profitable than
Mike Allen [00:21:42]:
buy an ugly shop and make it
Jesse Jackson [00:21:44]:
from the ground up. Yeah.
Mike Allen [00:21:46]:
Do you typically look at shops that are already operating at a high level and are profitable or do you want fixer uppers?
Jesse Jackson [00:21:51]:
Both. So about half the shops we've acquired have been turnarounds. So like the first shop we bought for $5,000 and we opened that December 27th of 2021 after I made Brian work over Christmas weekend to get it ready to open because doggone it, we were not going to close for a minute. And now that shop is $3 million operation. They were doing three quarters of a million. So we've done that about half the time and about half the time we're acquiring something that's already doing much better. So I think this year our focus is on cash flow, positive acquisitions more so than turnarounds.
Mike Allen [00:22:36]:
Do you have a fixed footprint that you're looking for? I want 10 bay shops. I want eight bays or with road frontage or what. What's the ideal model for you?
Jesse Jackson [00:22:45]:
We look for stuff that's seven or more bays. Although that said, we just acquired a five bay. They had their. This week was Mango's best week ever, which I. We've been hitting that a lot, so it's super exciting. But our this brand new 5 bay that we acquired in January did 61k this week, which is love it. Our 12 bay in the same city did 63k.
Mike Allen [00:23:15]:
So we're like, wow, is there inner store communication? Are they like, we're coming for you boys?
Jesse Jackson [00:23:20]:
Yes. They're a little competitive and we're building like a leaderboard, I think, in a friendly way. Like the manager of one of our shops used to work under the manager of the other shop. And so, you know, he's proud. He's trained this manager who's kicking his butt, but he's also like, dang, yeah, I'm Coming for you.
Mike Allen [00:23:40]:
Very cool. So real quick, I want to back up. Earlier you said that you have seven children.
Jesse Jackson [00:23:47]:
Yeah, that's true.
Mike Allen [00:23:49]:
Age gap. How far are they apart?
Jesse Jackson [00:23:51]:
The babies too? And you know, I have college age kids, so there you have it.
Mike Allen [00:23:58]:
I'm exhausted just thinking about that. You need more shops just to afford the food budget.
Jesse Jackson [00:24:03]:
Exactly. I'm driven just to be able to feed my children, especially the teenagers. And come October we'll have five teenagers, I've got two.
Mike Allen [00:24:12]:
And I swear that our grocery budget has doubled in the last couple years. It's insane the amount of food they're
Jesse Jackson [00:24:19]:
able to put away because they eat like probably three times you each.
Mike Allen [00:24:23]:
It's madness. But you know, great source of joy, great source of frustration.
Jesse Jackson [00:24:27]:
Yeah.
Mike Allen [00:24:28]:
How many of them do you think are going to want to be a part of Mango?
Jesse Jackson [00:24:32]:
You know, that's interesting because my oldest daughter, definitely interested. Surprised me like. And when I say she was working in the shop, she's not like answering phones. She's back there changing oil, changing tires, doing inspections, putting the car on the lift. So that's, it's really cool to see her hard work ethic. I didn't think was it. Think anyone else was very interested. But they, you know, have expressed an interest like we're big enough now, we get lots of offers that we turn down.
Jesse Jackson [00:25:06]:
And they heard me talking about an offer and my 14 year old daughter said, you're not gonna sell mango, are you? And I said, well, no, not now. Like the answer right now is no. But why do you care?
Mike Allen [00:25:17]:
Yeah, one day.
Jesse Jackson [00:25:17]:
But she's like, but Mango is like, like ours. Like we go there and we get a drink and dried mangoes. I'm like, okay. Apparently they have some kind of attachment to it, but we'll see how things develop.
Mike Allen [00:25:30]:
When the numbers are right and the number is right, you can supply them with all the mangoes they need. So a lot of folks that are, have come in and experienced this kind of rapid growth like what you've had, they're very intentional and they're very, you know, target driven. And I feel that from you to a degree it's a weakness for me because I'm, I'm all over the place. But they have a, a fixed target. Like, you know, I've got an, an acquaintance whose target is 30 stores by 2030. Right. And that's been his target since 2015. And he's going to get there.
Mike Allen [00:26:08]:
Right. And his goal is to get to that roughly 30 stores and to get rolled up with partial Equity to be part of a bigger group, to get rolled up a second time. Right. And the financial realities of that, that plan are staggering. Is that in the future for Mango or do you, do you think in terms of that or.
Jesse Jackson [00:26:35]:
So right now there's two paths. We're continuing to grow by acquisition and we are also putting a co op together where the co op is just a group of shops. A group of shop owners who want to exit their business in a couple of years do not want to exit at a 3x, but something like a 9x is much more exciting to them.
Mike Allen [00:26:56]:
Why wouldn't it be?
Jesse Jackson [00:26:57]:
Do you cuss on your podcast all the fucking time? This is like I said this yesterday and private equity was standing in the back of the room and they had a talk with me, but I said, like, fuck private equity. Because the company that I mentioned to you before, that we sold to private equity, like, this was a real moment for me because I thought we have put our blood, sweat and tears into this company. And what did you do? Nothing. You showed up with a checkbook and you wrote a check and I'm gonna leave it there. You wrote a check.
Mike Allen [00:27:31]:
That's all you wrote a check eviscerated the soul of the business.
Jesse Jackson [00:27:34]:
Yeah. So you see this spread, like we had that rumored left lane auto selling for 16x earlier this year. And then you have a shop owner selling for a 3 or you bigger shops of 5, a 6 maybe. But that gap on the table, that 9 or 10x between what private equity is getting in between what the shop owner is getting is literally like the difference between a shop owner being able to retire and live their life, how they want to live it, versus eking out of retirement and worrying about whether they take Social Security at 62 or 65 and how long they can make it like that is a huge gap of wealth that right now we're letting someone outside the industry take. So the premise here is, how do we as shop owners take back a bigger chunk of that multiple? And so when Brian and I originally started talking about this, like, the answer was acquisitions. Like, you get to a certain, you get to 20 million EBITDA, you're going to get a much higher multiple. Maybe not a 16, you're going to get a 14, a 15, a 13. Somewhere up there.
Mike Allen [00:28:40]:
Look, when I first opened my shop, I thought old systems would keep up, the software that I had would continue to evolve. But as we grew the slow estimates, scattered workflow, increasing downtime, it really just, it was becoming a real problem. That's why I switched to techmetric. It's not just software. It's a complete shop management system that makes my life easier. Smart jobs, instant estimates, integrated payments, integrated financing options. I mean, it allows me to focus on the work that actually makes me money and not get bogged down in the other details. My shop's repair orders have jumped over 300% since switching to TechMetric.
Mike Allen [00:29:16]:
And when I need help, their support team responds in real time. I actually was online with them asking questions just this week and I got answers in minutes rather than having to wait for callbacks and emails days later. If your system is holding you back, it's time for a change. Tap the link in the show notes and see how techmetric can help you move your shop forward.
Jesse Jackson [00:29:35]:
But it left this gap with the chucks who needed a bigger multiple and aren't going to go out there and acquire eight shops. So how can we help them in it? And it's through this partnership that we're calling the co op.
Mike Allen [00:29:48]:
So there are a bunch of organizations. Not a bunch. There's a handful of organizations that I'm aware of that are out there trying to create bundles of small operators. Ones and twos and threes because they call me. Right.
Jesse Jackson [00:29:58]:
Yeah.
Mike Allen [00:29:59]:
To package for sale at a higher multiple. I've never really looked seriously into any of them because the biggest limiting factor to my business is growth is me because I'm a control freak and I won't let go and delegate effectively. Y and but what I'm seeing is these groups are being bundled together for presentation and package and sale at a much higher multiple. And it was great for the people that are exiting their business. And I don't know if you sat in on the panel this morning, the coaches panel, but one of the questions I asked was about pe. Is packaging and selling to PE a smart exit strategy? While at the same time we know that a lot of the time, I'm not gonna say all the time, but a lot of the time when. When pick the equity group of your of your choice name comes into town and buys up the little five, the five shop chain, the quality backslides, the customer satisfaction backslides, the team satisfaction backslides significantly. And so we can look at that as an opportunity to hire key players and bring them into our organization.
Mike Allen [00:31:09]:
But is that a betrayal of the team that you have built and the community that you support for the last 20 years, or is it a smart way to exit your business? So that was kind of a loaded question, but I wanted to throw a spicy meatball out there for them to. To chew on a little bit. You seem to feel like it's a little bit on the betrayal side or private equity.
Jesse Jackson [00:31:32]:
We all have to answer that question for ourselves. And it's like, yeah, is there a dichotomy, like, maybe like, low market private equity, who's taking a huge multiple, but then maybe like, mid. Mid market private equity, like, maybe let them have it. Like, who do you end up selling to? Like, what's the platform? Does. Do. Does your branding and the culture that you've built, like, remain inside of the business? I don't know the answers to all of those questions. All I know is I'm going to get emotional. This has been a rough conference, I think, for all of us in the automotive repair industry.
Jesse Jackson [00:32:06]:
All I know is life is too short, and you don't know how long yours is. So at the end of the day, we all have to think about what we want our lives to look like. And if someone wants to own their shop the rest of their life, that's wonderful. I want them to do that. But if they want to exit and drive their RV around the country and visit all their children across the country, I want to help them do that. So I think the larger question, I don't know, like, consolidation happens. It's going to happen whether we're a part of it or not. You can be the holdout, you can be the house that's surrounded by, you know, a huge apartment building, and that might be the right choice for you or someone who's listening, and I will back that person 100%.
Jesse Jackson [00:32:54]:
And if they want me to stand in front of the bulldozer, I'll do it. But everyone has a different, you know, path for their life. There are those owners who desperately want to go spend time with their family. So how do we get there if this isn't a means to an end, you know, for Chuck to retire and spend time with his wife and his kids, I would say his wife and his kids think it's worth it, that maybe customer service isn't as good, you know, at their shop. But on the other hand, you probably think the same way. I think what Mango Automotive is doing and what a lot of people in the industry are doing is raising the bar for customer experience. So when you bring that to the table and you bring that to the industry, like, maybe you make a dent in your corner of the universe. And that's one of internally.
Jesse Jackson [00:33:43]:
Like, that's our goal at Mango Automotive, to make a dent and to Bring equality both to our customers and our employees. So we're working on that. And will it in the end make a difference to save one starfish if we, if a fisherman goes and catches it? I don't have the answer, but I just want to help Chuck spend more time with his kids.
Mike Allen [00:34:08]:
So tell me how the co op works. Is it you find somebody who is a good candidate for the co op and mango buys 51% and bundles and then they get the second bite of the apple. One mango packages for sale or how does that work?
Jesse Jackson [00:34:24]:
Yeah, it's quite different from that. So I would consider that more just like private equity is doing that right now. Like we've gotten a bunch of offers recently to buy 51% like you want to buy control, but this is different because it's sort of remaining with the co op owners. So right now we're bringing together about 40 shops, give or take, that have 500k ish in EBITDA. That gets us to our 20 million threshold. Once all of those shops have signed Lois, and we have the 20 million EBITDA amassed, we will hit trigger point one. At trigger one, we will do a stock swap. So all of us, owners, Mango included, that now own our little company, Instead of owning 100% of our company, will own X percentage of this larger company and then we will season the larger company.
Jesse Jackson [00:35:19]:
Right. And there will be many challenges during this time to work out, you know, how management is happening, how finances are flowing. Then we'll sell 12 to 18 months after trigger one.
Mike Allen [00:35:32]:
Is the stock valuation or distribution equivalent to EBITDA contribution?
Jesse Jackson [00:35:38]:
Exactly. Okay, yeah.
Mike Allen [00:35:41]:
What's the process like in that 12 to 18 month window? What's when you say we're going to season that new entity, what does that mean? What do you do in that timeframe? Or do you just package it and
Jesse Jackson [00:35:51]:
for sale, you know private equity now as well as I do. So when we first started four or five years ago, we could be like, hey, we're friends, we're selling together and we're different brands and we're run differently and you could sort of see that increase multiple. But right now that's not really the game. Right. I think the question that I ask capital that calls us is what are you looking for? What's important to you? And that's what we have our eyes set on. So it is not only shared financial reporting as number one and then the second is, is shared decision making. Right. They want to know that all these companies have the same HR policies that we're all sort of running the same playbook and then finally like cohesiveness around processes and procedures.
Jesse Jackson [00:36:44]:
So it will be the task of that, you know, within that 12 to 18 months to shore up all of those things. We are truly becoming one company. So owners, at that trigger point, we'll have the option. Do you want to grow? Do you want to manage multiple shops in your area? Do you want to fade away? Do you already have a manager in place so we can begin to make those changes? We've interestingly found a lot of shop owners signing up that don't want to leave their businesses yet, but they see it as access to growth.
Mike Allen [00:37:17]:
Okay, interesting. How do you stay the boss in that situation?
Jesse Jackson [00:37:26]:
Is that what we want?
Mike Allen [00:37:28]:
Is that what you want?
Jesse Jackson [00:37:31]:
No, I think, you know, there's. And I'm not sure I am the boss anymore. Right. We're maybe the bosses. We are the bosses.
Mike Allen [00:37:42]:
Maybe that's the wrong word.
Jesse Jackson [00:37:44]:
We're going together. If you want to go fast, go alone. If you want to go far, go to go together.
Mike Allen [00:37:49]:
Okay, I like that. Well, you're putting, you're trying to get to that cumulative EBITDA number. How far along that path are you now?
Jesse Jackson [00:37:59]:
Good question.
Mike Allen [00:38:01]:
I think if I'm asking questions that you're like, I don't want to share this publicly. Just be like, I don't want to share that publicly. It's fine.
Jesse Jackson [00:38:07]:
Yeah, well, I just can't because we have NDAs.
Mike Allen [00:38:10]:
Okay.
Jesse Jackson [00:38:11]:
So I have not been asked that question. So I haven't checked like what things I can exactly share and what is too much. So we'll just pass on it.
Mike Allen [00:38:19]:
Fair enough. Fair enough. Super. So you said five years is a long way. So early on you said five years is a long way out to think and reading between the lines, that means five years you're going to be at or beyond that trigger point. Maybe even after the 12 to 18 months after that. Hopefully. That'd be great.
Mike Allen [00:38:39]:
Right. What does the end of 26 look like is for Mango, not the co op? So much, but are you trying to get another two, three, four locations that
Jesse Jackson [00:38:47]:
we're building the co op and we have a focus on acquiring cash flow positive shops. This year there's a couple new areas that we're looking at. In fact, we're, as soon as I leave here, we're gonna go tour some shops in Houston. So that'll be fun.
Mike Allen [00:39:01]:
Nice. Anybody we know?
Jesse Jackson [00:39:03]:
I couldn't even tell you their names. I have an NDA, but Kevin set that all up for me. So I I couldn't even tell you.
Mike Allen [00:39:12]:
There's some smart dudes and ladies operating in Houston and operating really good businesses. What an incredible market this is. Oh, such a good market.
Jesse Jackson [00:39:21]:
I lived in Texas for a dozen years. I love me some Texas.
Mike Allen [00:39:23]:
What's. What's your favorite market?
Jesse Jackson [00:39:26]:
My favorite market?
Mike Allen [00:39:27]:
Yeah. To operate automotive repair in the country right now.
Jesse Jackson [00:39:30]:
Well, it has to be Albuquerque right now. We have four shops there. It's like our.
Mike Allen [00:39:33]:
Just because that's where you are doesn't mean it has to be your favorite.
Jesse Jackson [00:39:36]:
It. You know, you have an affection for your firstborn.
Mike Allen [00:39:39]:
That's fair enough.
Jesse Jackson [00:39:40]:
That's fair enough.
Mike Allen [00:39:40]:
That's fair enough. Regionally, are you looking all over the country, or is it so for the
Jesse Jackson [00:39:45]:
co op, yes, but not for acquisitions. We are very much focused where we currently are. So we're already in West Texas, New Mexico, Arizona. So number one priority is always more shops to fill out the cities that we're currently in. Number two priority is to move eastbound in Texas and move in other parts of the state in Arizona, I would say that's probably about as far as we'll get in 2026. And then 2027, we may start moving into Colorado, Utah, and Nevada for some acquisitions.
Mike Allen [00:40:21]:
Very cool. What's the most fun thing that you do in this? Is it the acquisition aspect? Is it the marketing aspect? Is it just.
Jesse Jackson [00:40:29]:
I mean, I love a thrill. That's why I have so many children in so many businesses. Because you get another little thrill, but you can only get.
Mike Allen [00:40:36]:
That doesn't sound like thrill. That sounds like masochism.
Jesse Jackson [00:40:38]:
You can only get that dopamine hit so much. Like, after you've acquired eight shops, you don't quite get it as heavy anymore. So you got to find another way to do it.
Mike Allen [00:40:48]:
That's my bundle of five shops.
Jesse Jackson [00:40:50]:
What?
Mike Allen [00:40:51]:
Got to go buy a bundle of five or six shops from somebody.
Jesse Jackson [00:40:53]:
I think the co op's my next hit. Right. I'm just an addict over here.
Mike Allen [00:40:58]:
Okay, well, thank you so much for coming on. Time goes fast. I know, you know, we sit down, next thing you know, 45 minutes have gone by.
Jesse Jackson [00:41:06]:
Can I tell your audience how to reach out to me?
Mike Allen [00:41:09]:
Absolutely.
Jesse Jackson [00:41:10]:
Okay. If you're interested in the co op or selling your shop, I'd love to chat with you, but the best way is to text Kevin, who really owns my schedule.
Mike Allen [00:41:18]:
It was Kevin, the one walking around in the inflatable mango costume?
Jesse Jackson [00:41:21]:
No, but he did hire the inflatable mango costume man. Kevin was next to the inflatable mango man.
Mike Allen [00:41:27]:
If I, if I wanted to be the dude in the inflatable mango suit,
Jesse Jackson [00:41:30]:
we, I mean, you would have just had to let us know. Or you would have had to apply to that ad on gig Worker. Yeah, well, we bought him drinks too, so I think it wasn't that bad of a gig.
Mike Allen [00:41:42]:
He looked like he was having a good time.
Jesse Jackson [00:41:44]:
Okay, maybe Kevin is 505-441-4779, 4779 yeah, awesome. Or you can email me Jesse J e s s egoautomotive.com I'm curious what
Mike Allen [00:42:04]:
our listeners think about this whole concept about the co op, about this rapid growth model, about acquisitions and exit strategies. Call and leave a voicemail or a text. 704-266-3377704 Confess and oh my gosh, I
Jesse Jackson [00:42:23]:
want to know too. Come tell us what you think and then we can have a debate. I love a good debate.
Mike Allen [00:42:28]:
I support this all day long. Thank you.
Jesse Jackson [00:42:31]:
Thanks, Mike.
Mike Allen [00:42:32]:
Thanks for listening to Confessions of a Shop Owner, where we lay it all out, the good, the bad, and sometimes the super messed up. I'm your host, Mike Allen, here to remind you that even the pros screw it up sometimes. So why not laugh a little bit, learn a little bit, and maybe have another drink? You got a confession of your own or a topic you'd like me to cover? Or do you just want to let me know what an idiot I am? Email Mike Confessions of a shop owner.com or call and leave a message. The number 704 confession fess. That's 704-266-3377. If you enjoyed this episode, be sure to, like, subscribe or follow. Join us on this crazy journey that is shop ownership. I'll see you on the next episode.