Inside Automotive with Jim Fitzpatrick, powered by CBT News

Jack Hollis believes the automotive industry thrives when we focus on service, not sales.

• Jim Fitzpatrick • Season 1 • Episode 13

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Jack Hollis joins Accrual Equity Partners as managing partner after 33 years at Toyota, partnering with founders Brady Schmidt and Jacob Tilzer to create a multi-faceted automotive investment firm. Their company spans dealerships, collision centers, aftermarket repair, and M&A services with a unique approach focused on creating value through service and relationships.

• Jack chose entrepreneurship over corporate offers to continue serving dealers and customers
• Accrual Equity Partners operates across multiple automotive sectors including dealership ownership
• The company is self-funded, allowing more flexibility than traditional private equity
• Fixed operations remains the backbone of dealership profitability and is "recession proof"
• Dealership consolidation continues with mid-sized groups needing to grow to remain competitive
• Technology investments, especially AI, will transform dealership operations in coming years
• The M&A process typically takes about a year from listing to closing
• Accrual's philosophy centers on creating "win-win-win" outcomes for sellers, buyers, and communities
• Jack's industry relationships from his Toyota career provide valuable connections
• Continuous improvement (Kaizen) and servant leadership are core values for future success


Inside Automotive with Jim Fitzpatrick is powered by CBT News, your go-to source for the latest news, trends, and insights in retail automotive. Subscribe for more interviews with top industry leaders, dealership innovators, and experts shaping the future of automotive.

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Announcer:

You're watching Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick:

Hey everyone. Jim Fitzpatrick, thanks so much for joining me on another edition of Inside Automotive right here at CBT News. After over 30 years at Toyota, mr Jack Hollis has found his next chapter. He's joined Accrual Equity Partners as a managing partner. Today we're joined by Jack Hollis, along with Brady Schmidt and Jacob Tilzer, who's the founders and managing partners of Accrual Equity Partners, to talk about the future of automotive investment and what Jack is up to now so in his new position. So I'll start with you, mr Jack Hollis. Thank you so much for spending some time with us and give us an update here. I mean, the industry has been trying to run smoothly without you for six months and it's been tough. Man, we miss you.

Jack Hollis:

Jim, it's always good to be with you and you know what? I'm sure the industry is going to be just fine and you know what, and Toyota and Lexus are going to continue to be outstanding and do a great job and they're because their dealers are amazing. Um, no, I took the time after the retirement, got a six-month little window here of a lot of working out, running and, uh, still enjoying some some days apart. But, um, early on, I got to meet two gentlemen, Brady Schmidt and Jacob Tilzer, got very excited about what they had already been doing, what they are doing and what they want to do, and we kept talking about how this would be.

Jack Hollis:

And, um, you know, as you well know, I believe that god's in control of my life and my career and everything else I'm doing. And, um, I felt like my assignment at Toyota was done and my career and everything else I'm doing, and I felt like my assignment at Toyota was done and my assignment to start with AEP is just beginning. And I got to tell you I just don't think I could be more excited about it and the partnership with these two amazing men, and we're going to do our best and try to be just as successful as we can be.

Jim Fitzpatrick:

That's fantastic. Well, congratulations to you. I know that you had many, many opportunities and offers, I should say, to go in many different directions. Talk to me about how you made the decision to join Accrual. I mean, they were up against some stiff competition.

Jack Hollis:

Well, first let me just say thank you to each of the people who did reach out to me and who gave me an opportunity. I was blown away and there's a humble, a humility piece that you just can't believe, that people want you to join them. And so there was a lot of opportunity and I think each one of them most of them came from what we'll call the corporate side of things, but after 33 years of doing corporate, the itch to be more entrepreneurial, to taste that, to test that, to go for it, was pretty welcoming. Ultimately, I think it was about being able to be entrepreneurial but stay in the automotive space, at least to start, and then we're going to go some other areas as well. But to start to be in that automotive space really allows me to still serve customers and serve dealers, and that's what I've always loved to do and still get to do it, but from an entrepreneurial side.

Jim Fitzpatrick:

That's fantastic. Well, and congratulations to Brady and Jacob for landing Jack. I know that's going to have its huge payoffs. In your business, a lot of people love what he has had done with Toyota, and in your business, a lot of people love what he has had done with Toyota and obviously he's just a stand-up guy that people love and trust and that goes a long way in retail automotive or in the automotive industry. Jacob, let me start with you. Tell us about your company. Tell us about Accrual Equity Partners. What services does it provide? What solutions does it provide?

Jacob Tilzer:

Sure. So currently we're in the automotive dealership space, we're in the collision space, we're also general aftermarket repairers. We also distribute products and fluids to dealerships and repair shops. We also represent buy-side, sell-side transactions within the automotive space. So we touch a lot of different areas in the automotive space. We know it from a high level view, a ground floor view, from being inside the business, from being outside businesses helping. But my whole career and where we've gone with accrual is embedded in and around automotive.

Jim Fitzpatrick:

Okay, okay, great. And, Brady, if somebody is looking to acquire a dealership and needs funding, will you be there with funding for them as well?

Brady Schmidt:

Oh, Jim, thanks. It's a great question, great to be with you today. Thanks for the opportunity to chat with you for a few minutes.

Brady Schmidt:

Well, we have a multifaceted automotive-centric company in Accrual Equity Partners.

Brady Schmidt:

One of our flagship companies is where I spent 35 years of my career at National Business Brokers, which is Jacob just referred to in the M&A side of the business, and we have a lot of experience helping dealers and guys who want, or gals who want, to be dealers to raise capital to be able to become new car dealers.

Brady Schmidt:

So that will definitely be a piece of what we help dealers do, who want, or gals who want, to be dealers to raise capital to be able to become new car dealers.

Brady Schmidt:

So that will definitely be a piece of what we help dealers do. And one of the things we're extremely passionate about and I think part of the reason that the message resonated with Jack is is that we care equally about being successful and helping people and helping dealers along the way, and we really do believe that dealers are the backbone of of the american economy and and do more good than most people know in their local communities. They're the ones that are sponsoring the baseball team showing up for rotary, you know, involved in their local churches, giving back to the local charities, and so we're very passionate about helping dealers grow, be successful and and all the automotive uh ancillary businesses that surround new car dealers, and so we're very passionate about that. We're in a lot of those businesses now with some of our portfolio companies and we intend to come alongside dealers and help them continue to grow and execute on their dreams and their passion to grow.

Jim Fitzpatrick:

Yeah, it sounds like you've got quite a wide depth and breadth of opportunities there, unlike many in your space. I mean you've got quite a wide depth and breadth of opportunities there, unlike many in your space. I mean you've got technology, you've got fixed ops opportunities and collision and retail, automotive and different kinds of solutions in terms of things that you're sending out to car washes or, I guess, body shops and what have you and the way of supplies. Talk to me about that. That's a little bit different than what I'm used to in this space.

Brady Schmidt:

I think one of the things that makes us very different is we're operators that came up in the automotive space. Jacob had a very successful business that he built, one of the largest body shop companies in the country, 50 rooftops across seven states. Obviously, Jack's resume speaks for itself. I came up in the M&A side of the business with National Business Brokers, a family-owned company that my dad started in 1978.

Jim Fitzpatrick:

Wow.

Brady Schmidt:

Sold more than 950 new car dealerships and then about seven, eight years ago I became a new car dealer myself in a Mercedes-Benz dealership in Fresno, California, and now currently together we own four dealerships three dealerships in Hawaii and a dealership in Southern California and I plan on aggressively growing that footprint with new car dealerships. And and a dealership in Southern California and plan on aggressively growing that footprint with new car dealerships. And one of the things that attracted me to Jacob we got to know each other actually in a personal context, serving on the board of a nonprofit called Petra Cares that intervenes in the lives of kids that are aging out of foster care and we give them a seven week training course to become a level one technician in a new car dealership.

Brady Schmidt:

Wow, that's a great idea and we help place them into a new car dealership, and Jacob's passionate about that mission as well. We got to know each other while serving on that advisory board of that nonprofit and as we got talking, he's like gosh. I know Body Shop super well and built a really great business and a lot of these other ancillary businesses, and you're in the new car business and you have this M&A company. We should you know, we should form a holding company and put something together. So something that makes us very different is we're a self-funded private equity company. We're not out in the market trying to raise capital, at least not today. And when Jack when I saw that Jack resigned from Toyota, he and I actually met at another nonprofit charity event called Giving Hope, new Orleans, Troy Duhon's charity there.

Jim Fitzpatrick:

I know it well. Yep Troy is doing amazing work.

Brady Schmidt:

Yeah, he does. Amazing human being, and Jack and I met there a couple of years, in 2022, a couple of years prior to starting this conversation and I just simply called Jack and said Jack, I don't know what your next step is, but if you want to come join Jacob and I and do something where we can make a big difference and have a big impact on the industry that we're all so passionate about, we'd love to have a conversation with you about it.

Brady Schmidt:

And that just developed over a handful of months and it became clear that this was the right fit.

Jim Fitzpatrick:

That is fantastic, Jack became clear that this was the right fit. That is fantastic, Jack. As you know, fixed ops is something obviously Jacob knows this as well, but this is an area that every dealer is focusing on I'm sure, Brady, you are as well because it seems to be the area that, through thick and thin, we all end up in fixed ops, right, whether it be through COVID. What are we going to have to offer? We're going to have fixed ops. The same thing holds true now with the tariffs that we see. Everything kind of leads back to how much can we make in fixed ops? Talk to me about that and the future of fixed ops.

Jack Hollis:

Future of fixed ops is going to be as it should always have been, should be the major focus of every dealership and every independent out there. It's what drives. It's recession proof If you have a problem with your car needed to drive, you got to have it fixed, you know. And it's technicians and the need for more technicians which is something we're going to be working on. And I think ultimately, the focus here and it has been has got to be how do you take care of the local customer, not just faster, but more personally? How do you develop that relationship?

Jack Hollis:

Some dealers do it really really well. Some dealers don't focus on it at all. That's right. And in those marketplaces, that's where you'll see someone like us come around and really help the customer. It's got to be about making sure the customer is taken care of. That's right. It is a business that is still it's full and still not good enough, meaning it has plenty of people wanting to do the business. But why is there such a difference from A to Z in quality? And we're going to be at the top of that and we'll compete really well.

Jim Fitzpatrick:

Yeah, no question, jacob. As you know, many times in a dealership operation, the GM or maybe even the dealer principal typically came out of variable ops. Sometimes I get emails on this topic because I'll hear from a fixed ops that says I'm a dealer and I came out of fixed ops. For the most part, they come out of variable ops. Would you agree, jack, that they run a good showroom, they become GM and then they become a dealer principal? What have you? And it seems as though the people that have actually come out of fixed ops and have been an effective fixed ops director run even a better operation when they become a general manager or a dealer. Would you agree with that?

Jacob Tilzer:

I would, because they pay all the bills with the fixed op money and any car they end up selling falls right to the bottom. That's right Totally.

Jacob Tilzer:

Yeah, fixed ops is so nuanced and I'm not saying the new car side of sales is not, but managing technicians and throughput and profit per RO, there's a lot of levers to pull in the service department. So I think the fixed ops guys that have been in it lived in it and get it. They pick up the variable side pretty quick. Sell a car I got front end, back end here's what I'm in the car for and it's a pretty quick transaction versus hey in a repair shop where we've got a $15,000 warranty bill and we've got to change a motor and that's going to be a three-week job and the billing process behind it to me is a little bit more nuanced and technical.

Jim Fitzpatrick:

That's right. That's right, Brady. With your M&A background and your experience as a dealer principal, you bring a rare kind of a dual perspective. What trends are you seeing in the dealership buy-sell market right now?

Brady Schmidt:

Well,J im, as you know, you see, every day too, Consolidation's going to continue to happen. And where we've really found a sweet spot over the last 40 some odd years has been dealing with dealers that are three to seven rooftops, ten rooftops, in that medium to small dealer group space, and those dealers need to grow to stay competitive in the marketplace of the future, because to be successful today is very different than what it's going to take to be successful even three, four, five years from now with the advancement in technology, especially AI.

Jim Fitzpatrick:

Yeah, for sure.

Brady Schmidt:

And Jacob could talk a lot about that. He focuses on that area for our company. But with the advances in AI alone, there are a lot of things that are done in dealerships today that are going to be very different and done very differently in very, very short order, and the dealers that aren't big enough to make that investment across their platform are going to find themselves falling behind.

Brady Schmidt:

And so our goal is to get the message out, to show dealers what we're doing and help dealers do exactly what we're doing to shore up the technology side of the business in order to be able to stay relevant and stay ahead of that curve. And then, obviously, those dealers that decide they're not ready to make that investment or they don't want to go down that journey, then we're going to be here for them to help them exit in the best way possible, for the best outcome for them and their families.

Jim Fitzpatrick:

Sure, sure, Brady, if somebody's listening right now and they're a dealer and they've got a few stores and thinking about, maybe now is the time you know, they're maybe in their late 60s, early 70s, they don't have anybody to leave the dealership to per se and they're thinking about, you know, hanging it up. What's the? What's the typical process? Or I should say the length of time, maybe the process too, but what's the typical length of time from the time you get that call that says, hey, we need some help here, we want to take it to market, from the time that they're actually walking off the showroom with their, their check, so to speak?

Brady Schmidt:

That's a great, that's a great question. You know their check, so to speak. That's a great, that's a great question. You know we're a little different than most of our contemporaries in this space. We, we really want to add a lot of value on the front end of the process. So what we try and encourage our clients to look really, look, really as far ahead as you can look in this process and get started today. So it's not uncommon for us to begin a relationship with a client and we help them improve their business for a number of years before we even take them to market.

Jim Fitzpatrick:

Oh, wow, okay.

Brady Schmidt:

And what we've really realized is when you care about the outcome so much and you realize that this dealer or this family or her family have been, they've blood, sweat and tears and every dollar they have at risk in this business. Right, you know, our responsibility is to help them have the best outcome possible, and it's not just money, it's making sure the legacy of their businesses is carried on. It's making sure that the employees are well taken care of and we find the right fit for that business.

Brady Schmidt:

But, in terms of the economics, the sooner we get involved, the more we can impact their profits and as buyers are looking at these businesses with a, you know, trailing 12 months or the last 12 months calendar year or the last couple of years of income, it makes a significant income. I mean impact in the outcome of the price of these dealerships.

Brady Schmidt:

But to answer your question directly from the time we take an assignment to take a dealership to market to get an actual closing is and the factory's timing has a lot to do with this because they take a lot of this time in the approval process, but it's about a year.

Jim Fitzpatrick:

It's about a year long process, okay, okay I see you nodding your head there, Jack earlier about, you know, taking care of the business before you actually take it to market. Talk to us about the importance of that. Obviously, every dollar that you can bring to the bottom line or to the net profit, you may get seven, eight, nine dollars times that, right. And there are those dealers that think, well, you know, let me just run out there, sell my store and be gone. But that's not necessarily to Brady's point.

Jack Hollis:

That's not the way to go right, you know? I think it's when most people get into the deuter business. You want to make money and you should.

Jack Hollis:

You're putting your capital at risk and you want to get a payback for it. That's what it should be, but those once it's established. There's a legacy piece that I think I was nodding my head on, because it's more than that. It's what are you doing to influence your community, influence the customer? And it's still about what you're giving. And if you're only focused on what you're getting, it's going to end up feeling a little bit empty. It's never enough. But if you're talking about how much you're giving to that community, to the customer, it actually grows upon itself seven, eight or nine times.

Jack Hollis:

And I think one of the things that we're focused on through Brady's business at NBB, it's how can we set up a situation where there's three wins, a win-win-win, because most unfortunately, in a buy-sell situation, oftentimes one feels like they won and somebody feels like they lost. We can't let that. There has to be a win and win. And the third win and that is the community right. So that's the goal really as we go forward, and that's why you got to take care of that business, keep growing that right To the best of your ability and then, when it's time, like you said, get to a certain age or you're just done. How can we hand it off with a great handoff, so that both parties are happy and maybe even stay friends going forward? And that's it's rare, and I'm not saying we can do it every time, but shouldn't our goal be to make it something like that? And that's where I'd like to see us go.

Brady Schmidt:

That's such a good point because one of the things that's interesting about accrual equity partners is, you know, between Jacob's fixed ops experience, jack's OEM and retail experience and marketing experience my experience in M&A and as a dealer we have the opportunity to come alongside dealers and help them actually optimize and break through barriers that they're butting up against to get to the next level in the business and then if they decide they want to exit and sell, then we have a solution for them.

Brady Schmidt:

If they decide they want to grow, we have a solution for them. If they decide they want to grow, we have a solution for them. If they decide they want to get exceptionally good at what they have, with what they have, and optimize that for their own sake and their people's sake, we have a system to come alongside them to do that. So it's really an interesting model where it's not just a private equity firm that's out making investments in private companies to grow our own portfolio. We have a much bigger plan in mind and it really is to elevate the new car business and all of the ancillary businesses that surround the new car business.

Jim Fitzpatrick:

Yeah, that's fantastic. I would imagine it also doesn't hurt to have Jack Hollis on the team when you're trying to get Toyota approval Right. What are the ins and outs of that deal? You never know. Jack Hollis on the team when you're trying to get Toyota approval right. What are the ins and outs of that deal? You never know.

Brady Schmidt:

I think, having Jack Hollis on the team accomplishes that in spades with everybody. Because, and Jack, I'm going to brag on you for a second. I know you hate it when I do this, but you know, Jack has had an illustrious career at Toyota and Lexus and made a huge impact in the industry. And I'll tell you, Jim, he had offers that you know, none of us could have touched to bring him.

Brady Schmidt:

So I'll tell you that you know, when he talks about feeling like he's found the place that he's supposed to come, there's truth behind that. If you look at our purpose and values for accrual equity partners, one of the lines says that there is a plan that is bigger than us and a series of intentional events that have brought us here, and the story about Jack joining this company is absolutely proof and evidence of those statements. And again, it's not just about going out and making a big splash and making big income, which we will and we are and we intend to but it really is just as much, if not more, about making an impact in the people that come along for the ride with us, and not only the people that work for us, but our clients and just in general, people in the space. So Jack is someone who exemplifies those things in every way, so we're super excited to have him on the team and know it's a great fit.

Jim Fitzpatrick:

Well, we're sorry to lose him on kind of the wholesale retail side but it looks like he's moving over to the M&A side, which is a good side to move over on. I speak to all of your colleagues in the M&A space here at CBT News and they tell me it's another incredible year for the closings that they have lined up the interest on both the seller side and the buyer side out there, both the seller side and the buyer side out there. As you know, jack, whenever I ask any of the individuals, the colleagues in the industry, we say what's on the top five list that dealers want?

Jack Hollis:

Toyota is either one two or three, right, yeah, and it hasn't changed since I've been gone. It's kind of interesting because all of my good friends at Toyota and Lexus on the dealer side, they've all just these past seven days, have been calling um, where I was getting two phone calls a day, now I'm getting four and it's like just more and more and they are, they're very, those are very, very um valuable assets and um and and dealerships. But there's a lot out there and I think there's a lot of dealerships and dealers who are looking for ways to continue to grow. And if we can help them, great. If we can't, then maybe you know they go on their own way, but we're going to give it our best.

Jim Fitzpatrick:

I would imagine you're going to get calls from individuals that where you actually signed their dealer agreement and said you know that, hey, 20 years ago, 10 years ago, five years ago, you know you approved me as a dealer and now it's time to sell and I like you and I like what you've done for me as a dealer and help me out, and so quite a few of those.

Jack Hollis:

Jim, you are right on it, I've got quite a few of those and you know, what's great about it is to think about some of those, go back 30 years and to have conversations who now are in the public space, the public ownership space or the big dealership groups, and some of them just calling to say hey, thanks, and maybe it's not to do business together later, but it's to say thank you for helping me be part of it, for believing in me 25, 30 years ago. And then some have said, hey, what do you want to do next? How do we work together now? And it's um, and we'll see how that works out, but it is actually really um, I don't want to say I guess it's heartwarming to just know how many relationships, um, I've been able to be a part of where I've kept them going for 25 and 30 years. They've kept them going for 25 and 30 years and now we're in a new place to say maybe we can help each other again and that feels pretty darn good.

Jim Fitzpatrick:

That's right. That's right. In fact, I'll give you the last word on this. What message do you want to leave the dealers with that are watching right now, and you've got so many entrepreneurial type dealers out there that want to grow their businesses, that want to make some fundamental changes for the better what message do you want to leave them with?

Jack Hollis:

Man, I guess I had it, matt, thank you. I guess there's two I would say. One is I want to say thank you especially to every Toyota and Lexus dealer. It's been an honor to be able to serve them. It's been a gift to be able to serve them. And the second one is the word serve. I think every dealer, we can do better. I still feel like every dealer it's kind of the Japanese word of Kaizen there's always a continuous improvement to get better. And I truly believe that if we could just think a little bit more about what we're giving to people giving in the way of service giving, in the way of relationship giving, in the way of ourselves and our passions that this industry will continue to be the envy of the world and it will continue to produce in ways that really make the United States even stronger. And I think the word has to be about serve or servanthood. One way or the other, it's got to be about serving, and I think we can do better.

Jim Fitzpatrick:

I think I agree. I say Jack Hollis for president 2028. You know, let's go. Jack Hollis, Brady Schmidt and28. Come on, let's go. Jack Hollis, Brady Schmidt and Jacob Tilzer. Thank you so much for joining me on the show today. Very much appreciate it. You'll see on the screen a way to get hold of these gentlemen if you're interested in talking to them directly. So we'll have that right up there for you. But, guys, thanks so much. This has been a real treat for me. Best of luck to all of you.

Jim Fitzpatrick:

Love to do a follow-up with you to see how things are moving along. Thank you anytime, Jim. Thank you, appreciate you great thanks. Thanks for watching inside automotive with Jim Fitzpatrick.