Auto-Magic buyout 'bittersweet' for two former car wash owners

Names change every day. But when an established business changes hands, the course of the company’s people and culture are permanently affected.

Seven years ago, Bill Barclay, former owner of Auto-Magic and Jiffy Lube locations in Springfield and Little Rock, Ark., said it was difficult to sell the company he operated for more than 40 years as he readied himself for retirement. He ultimately sold the area sites to a former employee, Steve Orman, and his business partner, Barry Krall, who used to work for Jiffy Lube and call on Barclay’s locations. Barclay’s hope was that they’d work to keep his commitment to employees and customers.

On July 28, Orman LLC, which purchased Barclay’s Springfield and Hollister locations, sold the Auto-Magic name and assets to Tucson, Ariz.-based Mister Car Wash. The new ownership hung its Mister Hotshine flag this month.

“It’s a bittersweet thing,” said Barclay, noting he opened the first Auto-Magic in 1962. “You don’t want to see the name change, but yet you want to see your legacy perpetuated.”

As an example of the company’s culture, the 81-year-old Barclay said in the early years of the business, he made it a point to hire young black workers because they had few job options in those days. Years later, he said he’s been proud whenever he hears from former employees who were grateful for his commitment to the community.

“What I found was that the way you treat the employees is the way they’ll treat the customer,” Barclay said.

Now that the company has changed hands again, he hopes Mister Car Wash can extend his legacy by keeping the sites clean and treating the employees and customers well.

Orman, co-owner of the Auto-Magic brand under Orman LLC, said the decision to sell to Mister Car Wash was difficult, but mitigated by the fact that he feels the company is well-run and offered to give nearly every employee an opportunity to join its staff. Orman said only two office workers of his core group of nearly 100 employees were not offered a job with Mister Car Wash.

“I didn’t want to sell to just some schleps with money,” Orman said.

Kingsley Group business broker Chuck Woolley said many business owners looking to sell are more interested in finding the right buyer than nailing the highest dollar.

“It’s not always about the numbers,” said Woolley, who has 30 years of experience in executive business management. “With the majority of people who are selling their business, there is typically a pretty strong emotional tie. Most sellers are anxious to make sure that whoever buys it is going to care of the business, its employees and its customers.”

Orman said a business broker was used as an intermediary to kick-start talks of a buyout with Mister Car Wash, a chain with 69 car washes, 28 express lubes and 2,600 employees in eight states.

“This was just a good opportunity for us at a good time,” Orman said, noting he only considered selling after revenues started to decline.

The proliferation of inexpensive automated car washing systems since 2007 with upstarts such as In and Out Car Wash, Legends Express Car Wash and John’s Mr. Zippy’s eroded Auto-Magic’s customer base, said Orman, noting that coupled with the economic downturn annual revenues began dropping by 3 percent to 5 percent, though he declined to disclose specifics.

“My business methodology was that I don’t wash cars for $3,” Orman said. “When a car came out of Auto-Magic, it was clean, dry and shiny. When you’re doing that on a Cadillac or a Jaguar, I think it’s worth more than $3.”

Orman said he and his business partner still own six Jiffy Lube sites in Iowa, and they are currently exploring business opportunities. The pair of former owners signed a noncompete clause with Mister Car Wash for an undisclosed amount of time, but he said it was possible that they’d look at returning to the car-wash industry afterward.

John Lai, chief operations officer for Mister Car Wash, said its business model is to provide customers with fast washes in a clean environment. He said the company liked the fact that Auto-Magic had multiple locations, and it liked the visibility of those sites by drivers on major corridors.

“This is not more complex than location, location, location. You can build a beautiful Taj Mahal car wash, but if it’s poorly situated, you’re going to struggle,” Lai said.

He said the company performed its due diligence, and with Springfield being a regional retail hub, it felt the quality of the market and the potential for future growth was strong.

While Lai declined to provide the purchase price, he said Mister Car Wash is spending roughly $1 million to refurbish the former Auto-Magic sites.

“Taking an existing building and giving it a contemporary and progressive look and feel requires a significant amount of capital investment and blood, sweat and tears,” he said. “During the last 90 days, we’ve been working very hard at fundamentally transforming the experience for the customers.”

The 81-year-old Barclay said he knows Mister Car Wash CEO Ron Peterson because they had both been part of the same industry organization when Barclay still ran Auto-Magic. While Barclay said he’s not sure Orman LLC always did things quite his way during the last seven years, he believes Peterson has a strong commitment to clean, well-run stores, based on recent conversations he’s had with him.

“I hate to see the name go, but I think they will have the same kind of enlightened management,” Barclay said.

Orman also said the sale of Auto-Magic was bittersweet.

“It is sad that the Auto-Magic flag isn’t flying out front anymore, but … I’m excited for the employees to join MCW,” he said. “The opportunities that have just opened up for those employees are just unimaginable.”[[In-content Ad]]