Mister Car Wash, one of the nation’s largest car wash chains, is now in local private equity hands.
Westwood’s Leonard Green & Partners has completed the transaction to take Mister Car Wash private in an all-cash transaction valuing the Tucson-based company at $3.1 billion. LGP first invested in the company in 2014 and owned roughly two-thirds of its common shares before the deal closed.
John Lai, Mister Car Wash chair and chief executive, said going private will deliver a new period of growth and give the company “greater flexibility to continue investing behind providing a superior customer experience” across its 500-plus locations nationwide.
“We couldn’t be more excited about the opportunity to partner with Leonard Green during this next phase,” Lai said in a news release. “They have been a great partner since 2014 and understand the business and industry deeply.”
Regulatory filings show LGP elected to take Mister Car Wash private to reduce the focus on its quarterly performance in a volatile market and execute more efficiently on long-term, strategic plans “absent the reporting and associated costs and burdens placed on public companies.”
Investigation on deal fairness
Mister Car Wash delisted on May 19, nearly five years after its initial public offering in 2021 at $15 per share. All public stockholders cashed out at $7 per share in the take-private deal — a price that attracted scrutiny from a New York City-based plaintiffs’ securities class action law firm for being “unfairly low.”
In April, Bleichmar Fonti & Auld announced an investigation into the agreement and potential conflicts of interest between Mister Car Wash’s board of directors and LGP.
“With the ability to approve the sale of Mister Car Wash to itself, needing only its own votes, LGP is incentivized to execute the deal as cheaply as possible,” the firm wrote in a news release.
Representatives of LGP initially proposed a price of $6.25 per share, regulatory filings show, which was bumped up 12% over the course of negotiations and three revisions.
LGP declined to provide comment on the transaction. Founded in 1989, the firm manages more than $85 billion in assets and specializes in buyouts, take-privates, recapitalizations and growth equity deals for service-oriented businesses.
In November, LGP snagged a majority stake in Topgolf and Topracer from Topgolf Callaway Brands, which subsequently shifted focus to its golf equipment and apparel business and rebranded as Callaway Golf Co.
