> THE LIQUIDATION GAP

What happens when the marks hit reality. Adjust the sliders and watch the equity evaporate.

Car Wash

Moat: ZeroRecovery: 10-25¢Mister Car Wash / Zips

The poster child of PE roll-up excess. 3,500+ new stores since 2020. Sale-leasebacks inflate EBITDA while destroying real asset value. Zero per-site organic growth.

Don't own real estate (sale-leaseback). Equipment specialized, bolted-in. Memberships non-transferable. In-bay washes can undercut at 1/15th the build cost.

EBITDA Haircut

Stress level-30%

0%-25%-50%-75%

Multiple Compression

Repricing-40%

0%-25%-50%-75%

SPONSOR SAYS

EBITDA

$50M

MULTIPLE

9.0x

ENTERPRISE VALUE

$450M

DEBT

$275M

EQUITY VALUE

$175M

LTV

61.1%

STRESSED (-30% EBITDA, -40% Multiple)

EBITDA

$35M

MULTIPLE

5.4x

ENTERPRISE VALUE

$189M

DEBT (UNCHANGED)

$275M

EQUITY VALUE

WIPED OUT

LTV

>100%

LENDER RECOVERY

68.7%

REAL DISTRESS (-50% EBITDA, -60% Multiple)

EBITDA

$25M

MULTIPLE

3.6x

ENTERPRISE VALUE

$90M

DEBT (UNCHANGED)

$275M

EQUITY VALUE

WIPED OUT

LTV

>100%

LENDER RECOVERY

32.7%

RECOVERY WATERFALL

Enterprise Value (Stressed)$189M

Priority Claims (Admin, DIP)$9M

Senior Secured Recovery$180M

Loss to Lenders$95M

Equity Recovery$0