Driven Brands: Classic GoodCo/BadCo Setup, With Multiple Catalysts

Kyle Mowery of GrizzlyRock Capital presented his in-depth investment thesis on Driven Brands Holdings (US: DRVN) at Best Ideas 2025.

Thesis summary:

Driven Brands offers the best of both worlds: private equity control and stewarship as well as public market liquidity and the ability to purchase an equity stake at a discounted valuation.

Kyle sees Driven Brands as a classic “GoodCo/BadCo” setup, with Maintenance, Collision and Glass Repair, and International Car Wash as the good businesses (90% of 2024E EBITDA) and United States Car Wash as the bad business (10% of 2024E EBITDA).

DRVN shares are down ~50% over the past 18 months due to poor US car wash performance and CFO turnover. DRVN trades at a low stock price and valuation even as earnings growth appears set to inflect materially higher.

Kyle sees several upside catalysts, including (1) a sale or stabilization of the car wash segment (early 2025); (2) growth in the “Take 5” business may drive improved investor perception (2025); (3) resegmentation (2025); and (4) 2025 and 2026 earnings guidance (February 2025 and February 2026).

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About the instructor:

Kyle Mowery is the founder and managing partner of GrizzlyRock Capital. Kyle holds an MBA from the University of Chicago Booth School of Business and a BA in Economics from UCLA. GrizzlyRock takes a fundamental, value-oriented research approach focused on finding clarity within complexity in small cap companies. GrizzlyRock’s rigorous research and structured investment process provides a sturdy foundation for systematically identifying substantially mispriced securities with high risk/reward asymmetry.