Now with its acquisition of ALG and the merger with Autodata Solutions finalized, J.D. Power made another move on Tuesday in an effort to be a go-to provider of new and pre-owned automobile transactional data, valuation tools, vehicle feature information and consumer analytics to the industry.
According to a news release, J.D. Power announced the acquisition of Inventory Command Center (ICC), a leading automotive inventory management SaaS-based platform.
The company said this business — which is being integrated into the Autodata Solutions division of J.D. Power — is positioned to aggregate the anticipated growth of VIN-specific details brought on by more electric vehicles and automated technologies.
“With more automobile buyers than ever searching local inventories online before they ever set foot in a dealership, accurately and consistently displaying vehicle inventory has taken center stage,” J.D. Power president and CEO Dave Habiger said in the news release.
“Accurate information on vehicle supply has become a critical component of the increasingly complex auto sales ecosystem thanks to the growth of new technologies and powertrains, such as electric vehicles and automated technologies,” Habiger continued.
“By combining ICC’s proven inventory management technology with our robust vehicle feature information and valuation tools, we are giving multiple industry stakeholders, including dealerships, manufacturers, third-party websites and consumers the most comprehensive information available on nationwide vehicle supply,” he went on to say.
J.D. Power acknowledged evolving digital retailing strategies require dealers to optimally merchandise and differentiate their digital inventory from the competition by utilizing solutions that showcase their inventory to online shoppers within a customer centric experience and then syndicate that experience to all third-party sources from one unified command center platform.
The company’s command center platform can aggregate, normalize, transform and syndicate vehicle data, creating a “source of truth” of vehicle information for dealers, automotive manufacturers, car shopping sites, dealership websites and anyone else who needs to present accurately described and priced inventory.
For example, the command center platform specifically can merchandize the new automation technologies and powertrains such as battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and hybrid electric vehicles (HEVs).
“Like the current market of cars and trucks available today, inventory data comes in all shapes, sizes and engine types,” said Craig Jennings, president of the Autodata Solutions division at J.D. Power.
“ICC’s team has developed a unique platform that filters innumerable and often inconsistent data sets into a single, robust feed that is easy to consume,” Jennings continued. The result, combined with J.D. Power VIN description and merchandising solutions, is a service that supports dealers and manufacturers with syndicating appropriately branded, described and priced inventory.
“This will be even more critical with the influx of new EV models, features and technologies,” he added.
J.D. Power reiterated that vehicle-inventory merchandising is a critical aspect of online marketing with more than 56 million new and used vehicles being sold each year. Providing accurate branded descriptions, options and pricing are key to a full and complete online view of a vehicle specifically as it related to digital retailing, according to company experts.
J.D. Power pointed out the Command Center’s Inventory as a Service platform already is integrated with thousands of dealer inventory feeds and powers numerous third-party car shopping websites. While it aggregates VIN-level data, Inventory as a Service will leverage the ChromeData suite of products, which will properly brand, describe, price and visually merchandise each vehicle.
The company added the service is also able to deliver with each exported inventory record incentives and rebates, Chrome Image Gallery photos as well as VIN and model-specific videos.
“J.D. Power is at the pinnacle of delivering data and insights to the automotive industry,” said Kenny DellaPorta, J.D. Power head of inventory data services and former CEO of ICC.
“As a result, car shoppers can more easily find the right vehicle that meets their needs,” DellaPorta continued. “It’s an honor to join such a strong team and be able to collaborate on solutions that will help drive the industry forward by delivering on the value proposition of complete and precise inventory.”
Portico Capital Securities served as exclusive financial advisor to ICC with respect to this transaction.
Vroom said Tuesday it has signed a deal to acquire CarStory through the purchase of its parent company, Vast Holdings.
The deal is worth approximately $120 million, subject to adjustment, and is comprised by roughly 60% cash and 40% Vroom common stock. The exact cash-stock split will be determined when the deal closes, which is expected to happen in January.
CarStory provides artificial intelligence-based analytics and digital services to the auto retail industry with the aim of providing the “most complete accurate view of predictive market data,” according to a news release.
Vroom chief executive officer Paul Hennessy said in the release that the addition of CarStory should “strengthen and extend the reach” of the company’s ecommerce platform.
“At Vroom, we’ve built a platform made for scale and driven by data. As car buyers and sellers across the country increasingly turn to ecommerce solutions, CarStory will strengthen and extend the reach of our digital retailing platform, and together we will accelerate the transformation of the massive used auto industry,” Hennessy said.
“We’ve been continually impressed by the size, breadth and sophistication of CarStory’s operations as we have worked with them for the past two years and we are thrilled to welcome them to Vroom,” he said.
CarStory will continue to operate as a separate brand, a company spokesperson said in an email, and Vroom will utilize its AI and machine learning technology for car buying data analysis.
“Our mission has always been to provide data and services that enable our partners to grow and that won’t change,” CarStory CEO John Price said in a news release. “We believe joining the Vroom team significantly enhances our ability to transition an industry to digital retailing and will allow our partners to reach their goals even faster.”
In a deal that would expand the company into wholesale, CarGurus has agreed to purchase a majority stake in CarOffer, an automated instant vehicle trade platform.
CarGurus, which would acquire 51% interest in this deal, has the ability to also purchase CarOffer’s remaining equity interest over the next three years.
The deal is valued at $275 million
The purchase would give CarGurus the ability to offer dealers additional wholesale capabilities, leading to a digital solution by which dealers can sell and acquire retail and wholesale vehicles, the company said.
CarGurus said expanding into wholesale is a key piece of its overall platform strategy.
“CarOffer is disrupting the traditional wholesale auction model in the same way that CarGurus gained our position as the leading online consumer automotive marketplace in the U.S., by leveraging technology, data and analytics to build more transparent solutions,” CarGurus chief financial officer Jason Trevisan said in a news release.
“The combination of CarGurus’ industry-leading dealer network and our Instant Market Value retail pricing, and CarOffer’s instant trade technology and logistics capabilities, creates a powerful selling platform,” he said. “We believe we will be the most valuable partner to help dealers sell more cars at retail and now also sell and acquire cars in the wholesale channel.”
Pending regulatory and closing conditions, the companies expect the deal to close in January. After closing, CarOffer will continue operating independently, with its existing leadership, under its existing brand and at its headquarters in Plano, Texas.
Longtime auto entrepreneur Bruce Thompson is chief executive officer and founder of CarOffer. In the release, he said: “I’ve long admired the team at CarGurus for the innovation they have driven in the automotive retail sector, and the large consumer audience and dealer base they have built.
“CarOffer gives dealers an entirely new way to win more trades, acquire more used inventory and ultimately sell more cars,” Thompson said. “We’ve seen rapid adoption of the platform since our launch, and with CarGurus’ investment and dealer reach, we can accelerate that pace and volume to reach even more dealers. The synergies we will create with CarGurus’ market data and pricing engine will enable us to provide tools and sourcing capabilities dealers desperately need.”
CDK Global was part of the parade of merger and acquisition announcements to surface following Thanksgiving weekend.
On Monday, the provider of dealer management systems and integrated information technology solutions to the automotive retailing and adjacent industries announced the execution of a definitive agreement to sell its CDK International business segment (CDKI) to Francisco Partners for $1.45 billion.
Officials calculated the purchase price represents approximately 15 times CDKI’s adjusted EBITDA for the last 12 months, including expenses for the standalone business.
CDK said it expects the transaction to be completed during the third quarter of its 2021 fiscal year, subject to customary closing conditions and regulatory approval.
The company’s announcement came alongside J.D. Power finalizing its acquisition of ALG as well as the merger of S&P Global and IHS Markit.
“I am excited to announce this important milestone for CDK. With this transaction, we can now focus on executing the next phase of our growth journey and spotlight our attention on our North America business,” CDK president and chief executive officer Brian Krzanich said in a company news release.
“CDK has made significant progress over the last two years in strengthening and expanding our core business to be customer-centric and a leader in technology for our dealers, OEMs and partners and we have seen the positive results of our investment efforts,” Krzanich continued.
“We are now well positioned to expand our activities and create new revenue streams with even stronger growth prospects,” he went on to say.
CDK said it will use the proceeds of the transaction for general corporate purposes, including the pay down of debt to strengthen the balance sheet.
“While we believe the International business is a great asset and are very pleased with the compelling valuation, it largely operated independently, with specific technology, sales and operations tailored to the International markets. The sale of this business strengthens our balance sheet and provides significant financial flexibility in support of our goals to drive value and to accelerate growth in our North America business,” said Joe Tautges, CDK chief operating officer and interim chief financial officer.
“As our track record indicates, we will use a thoughtful returns-based approach to allocating capital and will provide an update to our planned use of proceeds at the release of our Q2 fiscal 2021 earnings results,” Tautges continued.
In their own news release, two members of Francisco Partners’ leadership team explained why they made this acquisition.
“The automotive retail experience is undergoing dramatic change. With its leading market position in EMEA and Asia, we believe CDKI is uniquely placed to support this transformation in these regions, and that by becoming a standalone company it will better be able to execute on this exciting opportunity,” said Petri Oksanen, partner at Francisco Partners, who will join the CDKI board of directors upon closing of the transaction.
“We look forward to working closely with the CDKI team and both their dealer and OEM customers — as well as the broader ecosystem — to provide the technologies and solutions needed through both organic development and add-on acquisitions to successfully deliver on this ongoing industry transformation,” Oksanen continued.
“We are impressed with the recent product developments and innovation at CDKI,” added Matt Spetzler, partner at Francisco Partners, who will also join the CDKI board at closing. “We believe the CDKI team has a sound strategy and strong foundation to leverage towards the goal of becoming the future automotive retail software platform of choice. We will seek to utilize our substantial resources and experience in helping other similarly situated software companies to accelerate the realization of CDKI’s vision.”
Based on the execution of this agreement to sell, the company explained the CDKI segment will be classified as discontinued operations in the second quarter of fiscal 2021. As a result, the company announced that it is withdrawing its previously provided annual consolidated guidance estimates for fiscal year 2021.
CDK said it will be updating its FY 2021 guidance to reflect continuing operations in the coming weeks once the preparation of the discontinued operations reporting is complete.
“For the last two decades, first with ADP and then with CDK Global, CDKI has operated effectively as an independent unit with different products and solutions, customers, and geographies,” CDK Global International president Neil Packham said in the release from Francisco Partners.
“We are excited about the partnership with Francisco Partners and how we can accelerate our strategic journey and growth potential as an independent company,” Packham continued. “With its broad portfolio, Francisco Partners brings a wealth of transformation experience and relationships to benefit our business for the future opportunities and challenges we face. And like us, they believe in delivering excellent service and products and are committed to outstanding customer service.”
Additional information about the deal is available on the CDK investor relations website at investors.cdkglobal.com.
J.D. Power has closed its purchase of ALG, a deal first announced in August.
The company said in a news release Monday that acquisition of the TrueCar subsidary "will dramatically broaden its vision of automotive residual value forecasting, especially important as the industry prepares to launch a wave of new electric vehicle (EV) models and pushes toward increased vehicle automation and other emerging technologies."
In a separate release, TrueCar said the $135 million consideration in the deal includes $112.5 million received at closing and up to $22.5 million in total deferred payments based on certain financial results.
TrueCar said it plans to use the proceeds of the ALG sale to support up to $75 million in share repurchases, a program that it has already started. The proceeds will also be used to "maintain strategic flexibility," TrueCar said.
In the news release from TrueCar, president and chief executive officer Mike Darrow said: "We are very pleased to reach today’s milestone, which reinforces our commitment to creating shareholder value. With over $270 million of cash on the balance sheet and no outstanding debt, we are in a strong financial position to accelerate toward our vision of building the most flexible and convenient digital car-buying marketplace."
Meantime, J.D. Power will integrate ALG into its data and analytics division. ALG is widely known for its expertise in residual value forecasting, something that will be crucial as new technologies, like EVs, gain a greater foothold in automotive.
"As the automotive industry continues to face several technological, environmental and economic factors, the significance of what ALG brings to J.D. Power data and analytics capabilities provides additive value to our clients," J.D. Power president and CEO Dave Habiger said in a news release.
"The industry is about to experience a product shift unlike anything it’s ever seen before with new EV models and other new technologies quickly gaining adoption over the next several years and beyond," Habinger said. "Having ALG’s expertise in forward-looking residual value forecasting will enable us to provide dynamic new product offerings that focus on new vehicle technologies and retail channels."
Thomas King, who is president of data and analytics at J.D. Power and is the company's chief product officer, reiterated the importance of bringing ALG into the fold particularly as electric vehicles take a larger share of the auto landscape.
"The large number of new and redesigned EVs entering the market coupled with evolving customer attitudes to transportation and EV ownership mean the auto industry must be prepared because their financial lives depend on it," King said in the release.
"Navigating this new landscape requires data, science and deep industry and consumer expertise. Manufacturers can rely upon our experts for reliable, transparent analysis and forecasting so critical contenting, pricing and incentive decisions can be made with confidence."
While about two-thirds of dealers surveyed in the second annual Kerrigan Dealer Survey don’t plan on altering their own purchase plans, just under half think that the next 12 months will show a rise in buy-sell activity.
And a quick observation of the market indicates the past couple of weeks have already been a busy market in the dealer M&A space.
Among other findings in the study from Kerrigan Advisors that surveyed 680 dealers, 64% of dealers say they don’t expect to change acquisition plans. Seventeen percent say they will buy more; 19% will buy less.
Meantime, 47% expect a rise in dealership buy-sell activity in the next 12 months, according to the firm.
“We attribute these contrasting responses — more expect the buy/sell market to increase than expect to be acquisitive — to a rise in dealers who are considering a sale,” Kerrigan Advisors managing director Ryan Kerrigan said in a news release.
“Overall, the results of the survey are consistent with Kerrigan Advisors’ expectations that a growing pool of dealerships will be for sale over the next 12 months. Dealer optimism on future valuations is a reflection of that.”
An anecdotal look at the market in recent weeks would also reflect that.
In the past two weeks alone, four acquisitions involving the Kerrigan firm in an advisory role have been announced.
On Nov. 10, Kerrigan Advisors, which is a buy-sell advisory firm, announced it had represented and advised Keyes Automotive Group when it sold nine stores to Lithia Motors. Two days later, Kerrigan said it had worked with Resnick Auto Group when it sold Midtown Toyota to Victory Automotive Group.
The firm served as an advisor and representative to Sterling Motorcars, which sold to Lithia last week. Kerrigan was the representative and advisor to Lyle Pearson Auto Group when it sold five stores to Gee Automotive.
Regarding the aforementioned Lithia, the publicly traded Oregon-based group has been quite the active buyer in the second half of the year.
Since July, Lithia has made nine announcements of purchases, the latest being the Sterling Motorcars group acquisition last week that gave the retailer a presence in the Mid-Atlantic.
“Entering our seventh top 10 market in the country further enables LAD to conveniently and affordably serve our customers throughout their complete ownership lifecycle,” Lithia president and chief executive officer Bryan DeBoer said in a news release. “This acquisition accelerates our unique omni-channel strategy and takes us one large step closer to achieving the year one network growth aspiration of our five-year 50/50 plan.”
He added; “Sterling Motorcars is a high-performing fixture in the Washington D.C./Beltway corridor and is well-respected for the exceptional customer service and attention to detail they provide their clientele. This is a very important milestone for Lithia and expands our national footprint in the mid-Atlantic. We are excited to welcome their team to the Lithia Motors family.”
Another public group recently making moves in the buy-sell space was Asbury Automotive Group, which sold Nalley Ford Sandy Springs to Jim Ellis Automotive Group.
The Presidio Group was the exclusive advisor to Asbury.
“Jim Ellis Automotive Group is an iconic automotive family in Atlanta and we knew this dealership would be the perfect fit for its ever-growing portfolio of franchises,” Presidio president George Karolis said in a news release.
He added: “This is the 37th dealership sold by Presidio this year and transaction activity continues to be robust. In fact, I cannot remember the retail automotive M&A market ever being as strong as it is today.”
Lithia Motors & Driveway has bulked up its presence in LA and the Southwest.
The company said in an announcement Tuesday that it has purchased nine stores from Keyes Automotive Group, an acquisition that “rounds out” the retailer’s Southern California footprint and expands it to Phoenix.
According to a separate news release from Kerrigan Advisors, which represented and advised Keyes on the deal, the transaction includes eight stores in the Los Angeles area (where Keyes is based) and one (Bell Road Toyota) in the Phoenix market.
The eight LA-area stores include:
Keyes European (a Mercedes-Benz store)
Keyes Lexus
Keyes Audi
Keyes Hyundai
Keyes Toyota
Lexus of Valencia
Audi Valencia
Mission Hills Hyundai
The move adds $1.4 billion in annualized revenue for the dealer group, meaning Lithia has now added more than $3.2 billion through its rapid expansion in 2020.
The acquisition was financed through capital raised in concurrent equity and debt offerings closing early last month.
“The Keyes acquisition adds approximately 800 new customer care associates and expands the reach of our omni-channel strategy into new markets,” Lithia president and chief executive officer Bryan DeBoer said in a news release.
“Growing our network with new vehicle locations increases our competitive advantage to procure used vehicle inventory and provides the ability to complete in-home and in-network solutions to our customers throughout their entire vehicle ownership lifecycle,” he said.
DeBoer added: “The leadership teams at Keyes Automotive are among the best in the business, having successfully operated and grown a family-owned business for over 50 years. We are delighted to welcome this exceptional group to the Lithia Motors team and look forward to tremendous success together in the coming years.”
Jerry Keyes, father of co-owner Howard Keyes, founded the group in 1950 in Van Nuys, Calif.
Howard Keyes and Howard Tenenbaum co-own the group, which is keeping the following stores: LA-area stores Keyes Honda, Keyes Chevrolet, Woodland Hills Honda, Woodland Hills Porsche; Centennial Toyota in the Las Vegas area.
“I am deeply grateful for the decades of support we have received from the communities where we have been proud to do business, and for the employees who have dedicated their time and effort to achieving top customer service and exceptional retail success,” Howard Keyes said in a news release. “We are confident that we are leaving our dealerships in the hands of a company that will not only continue our legacy of customer service, but will also extend that legacy’s reach through digital innovation, and provide our employees with great opportunities for career advancement.
“When we made the decision to sell, it was critical to work with a firm who understood that preserving and enhancing our brand and legacy was as important to us as the terms of the deal. Kerrigan Advisors’ track record of success selling the largest dealership groups in our industry, along with their deep expertise navigating and advising on complex, multi-dealership transactions, was truly invaluable to achieving our goals,” continued Keyes.
Erin Kerrigan, founder and managing director of Kerrigan Advisors, said: “We are honored to have represented Keyes, one of the most well-respected dealership groups in the country, in its sale to Lithia Motors.
“Keyes has served the Los Angeles area for over 60 years as an award-winning auto retailer and sought-after employer. Howard Keyes and Howard Tenenbaum instructed our firm to identify a buyer with the scale and standards to continue Keyes’ reputation for stellar customer service and a strong, supportive employee culture. In Lithia, we found the perfect buyer to carry on this legacy.”
In a transaction involving Kerrigan Advisors, two groups purchased three franchised dealerships in Illinois from Continental Motors of Naperville.
According to a news release, Continental Audi and Continental Mazda were sold to Chicago-based Bill Napleton Auto Group, while Continental Acura was sold to Desmond Roberts, owner of Advantage Chevrolet of Hodgkins, Advantage Chevrolet of Bolingbrook and Advantage Toyota of River Oaks, all located in Illinois.
Founded in 1961, Continental Motors Group is one of the oldest and longest-running family owned dealership groups in the Chicago area. Brothers John and Herman Weinberger opened their import repair shop in Lyons, Ill., in 1961 and quickly became new-car dealers with their first franchise, Triumph, in 1962.
From that point, the family business grew through the brother’s legacy of customer support and service, ultimately leading to Joel Weinberger’s ownership of Continental Motors’ Naperville platform.
“As a family, we are proud and thankful to be a part of the Naperville community, Chicago’s largest car market,” Joel Weinberger said in a news release distributed by Kerrigan Advisors. “I am incredibly grateful for the years of hard work from my Continental team, and for the support of my customers and the community over the last three decades.”
In addition to serving its thousands of customers, Continental has also championed local charities during the last 33 years, including the Drive for 135, an annual fundraising event to end homelessness and its annual “Driven to Care” vehicle donation program that has put 56 vehicles in the hands of needy families over the past seven years.
The Naperville dealership group is part of the larger Continental Motors Group. With these transactions, the Weinberger family will continue to own and operate Continental Honda in Countryside (owned by brother Jay Weinberger), and Continental Toyota in Countryside (owned by cousin Cheryl Nelson).
According to the news release, Joel Weinberger will retain and manage his Ferrari dealership in Hinsdale, Ill.
Among Continental Motors of Naperville’s many accolades are being named Naperville’s Best Auto Dealership every year since 2009 by Naperville Magazine; Continental Audi’s recognition, three times as an Automotive News Best Dealership to Work For and 13 times as an Audi Magna Society award winner as well as an Audi Magna Society Elite winner in 2018. Continental Acura also is a 20-time recipient of the Precision Team Dealership of Distinction Award (more than any other Acura dealership in Illinois) and Acura’s Gold Environmental Leadership Award.
“The traditions that my father John and my uncle Herman started have carried over through the years in my business,” Joel Weinberger said. “Things like exceptional customer service and a commitment to a strong work ethic. That has passed the test of time for us, and that’s how Kerrigan Advisors approached this transaction.
“We selected them as our exclusive sell-side advisor to represent us for that reason and are very grateful for the expertise and assistance they provided throughout the sale process. Their preparation, accounting review, due diligence management and ultimately closing assistance were invaluable to our transaction,” Weinberger went on to say.
These transactions mark the 93rd Kerrigan-led dealership sale since 2015.
“The auto retail industry is tracking toward record profits in 2020, despite the challenges of COVID-19. Not surprisingly, buyers in today’s active buy/sell market are seeking prime assets such as Continental’s Naperville dealerships,” said Erin Kerrigan, founder and managing director of Kerrigan Advisors. “Our firm was honored to represent Joel Weinberger in the sale of his dealerships, which are among the most valuable in Chicago. Naperville is an incredible car market, and Joel’s dealerships are known for their impeccable reputation in the community and committed employees.
“With a 60-year family legacy and a complex, multi-dealership transaction, it was vital that Kerrigan Advisors dedicate the time and energy necessary to prepare Joel’s group for sale, so we could identify the right buyers for his valuable dealerships and ensure a smooth closing,” continued Kerrigan, who was among this year’s Women in Retail honorees highlighted in Auto Remarketing. “Continental has a lasting family legacy that will continue to grow and evolve with the new owners, both of whom are family run with multiple generations involved.”
David Blum, Scott Wasserman and Santiago Assalini of Akerman LLP served as legal counsel to the seller. Christine Smith of Crowe served as the seller’s accountant.
Another company in the used-car space is going public through a merger with a special purpose acquisition company, also called a SPAC.
CarLotz and Acamar Partners Acquisition Corp., a publicly traded SPAC, announced Thursday they have agreed to a definitive business combination through which the used-car consignment and trademarked “Retail Remarketing” platform would become publicly traded.
The combination is expected to close in the fourth quarter, and once it does, the combined company is expected to continue its listing on Nasdaq. The newly named CarLotz, Inc. would trade under the “LOTZ” ticker symbol.
Fidelity Management & Research Company LLC, other investors and strategic partners like KAR Global, McLarty Diversified Holdings, former General Motors chief executive Rick Wagoner and TRP Capital Partners have agreed to invest $125 million via a common stock PIPE at $10 per share.
The PIPE participation also includes Acamar Partners and Michael Bor, who is the co-founder and CEO of CarLotz.
“We are thrilled to bring CarLotz and Acamar Partners together as one company, adding more fuel to the fire that we built when founding the business in 2011,” Bor said in a news release.
“We pioneered the Retail Remarketing industry by creating a system for corporate sellers of vehicles to access the retail market,” he said. “Our technology, omni-channel marketing and asset-light inventory sourcing model allows consumers to buy, sell, trade or consign vehicles online or in-person, creating a unique model to capture market share over the long term.”
The merger implies a $827 million pro forma enterprise valuation for CarLotz.
The news release indicates that, “Existing CarLotz shareholders will roll over the vast majority of their existing equity, retaining 59% of the combined company’s pro forma equity.”
The merger is being funded through a combination of the $125 million in PIPE proceeds along with Acamar Partners’ up to $311 million cash-in-trust.
This will allow the newly combined company to retain as much as $321 million in cash after the merger, assuming there are no redemptions by existing Acamar Partners shareholders. This cash would go towards working capital and growth.
The news release also indicates the transaction should fully fund the expansion and growth initiatives at CarLotz. Among those plans are core technology investments and capital expenditures to fuel a hub expansion across the country.
Acamar Partners CEO Luis Solorzano said in a news release: “CarLotz embodies our investment philosophy of growth and value creation. Our team at Acamar Partners is partnering with CarLotz not only because the Company offers the highest growth prospects in the industry over the coming years, but also because it is one of the industry’s run-rate profitable and cash-flow breakeven players.
“On top of this great combination of attractive market dynamics and a differentiated business model, CarLotz benefits from multiple short- and long-term growth opportunities driven by its ongoing nationwide expansion, which Acamar Partners expects to support through this transaction. We are pleased to partner with Michael and the team and be part of this disruption opportunity.”
This week, Open Road Capital and Bain Capital Credit announced the formation of a strategic partnership to make long-term equity investments in automobile, heavy truck, recreational vehicle and heavy equipment dealerships and other transportation companies, especially operations that have been in family hands for decades.
And these firms already made their first move by making an investment in a Mississippi dealership group.
The first investment is in Herrin-Gear Autoplex, a family owned and operated dealership group. Founded in 1968 by Carl Herrin and George Gear, the Herrin-Gear portfolio includes BMW, Chevrolet, Infiniti and Lexus dealerships in Jackson, Miss.
The business has remained family operated under the leadership of Jack Herrin since 1998. According to a news release, management will continue operations consistent with those that propelled the dealerships to among the top performers in the region.
As part of the transaction, the firm said general manager Reed Howell has been elevated to president of Herrin-Gear and has acquired an equity stake in the business.
“This transaction reflects a major milestone for our family and for our business. Partnering with Open Road Capital will allow Herrin-Gear to pursue new opportunities while maintaining the legacy and culture built over the past 50 years,” said Herrin, who will maintain an equity stake and continue to serve on the company’s board of directors.
“Open Road Capital’s deep industry knowledge and expertise, along with their familiarity with our business, makes them the ideal strategic partner for our team as they seek to take Herrin-Gear to the next level,” Herrin continued.
As Open Road Capital and Bain Capital Credit forge ahead, InterPrivate, a family office backed investment firm, also is expected to offer additional long-term capital to the platform for certain future opportunities.
The firms said the platform launches with the objective of building a substantial portfolio of distinct investments in partnership with top-performing operators throughout the country.
They continued by noting the primary mission of the platform is to partner with high-performing dealer groups nationwide by providing equity capital in support of family member and business partner ownership transitions, recapitalizations and estate planning, growth and acquisition opportunities, or a combination.
Open Road Capital said it also will purchase dealerships outright from dealers seeking a complete exit, including dealers who would like to see their legacy continue through sales involving their current general managers or group of managers.
The firms explained each investment will be made in partnership with a dealer/operator, and the stores of each dealer/operator will reside within a separate partnership and operate independently from other platform investments. The firms said this approach preserves the entrepreneurial spirit that drives great operators, augmented by capital and other support that accelerate growth and scale in today’s competitive environment.
“We are excited to partner with the extended Herrin family, Reed Howell, and the quality management team assembled at Herrin-Gear,” said Eric Chelline, partner at Open Road Capital. “This proven team has generated strong results through multiple economic cycles, and we look forward to providing the resources and latitude to support their continued success.
Open Road Capital Partner Tim Batchelor expressed appreciation for the firm’s continuing and expanding relationship with Herrin-Gear’s manufacturer/distributor partners, noting, “Along with dealers, manufacturers and distributors are Open Road Capital’s most important partners, and we look forward to helping them achieve their network objectives by providing financial support to top performing dealership operators who otherwise might not have the resources to achieve their goals.”
Bain Capital Credit managing director Olof Bergqvist shared his perspective on the partnership.
“Over the last few years, we have built a close relationship with Open Road Capital, and we share a strategic vision of the constructive role our partnership can play in unlocking opportunities in this evolving industry,” Bergqvist said.
Fellow Bain Capital Credit managing director Matt Evans added, “We look forward to a productive partnership with Open Road Capital as we seek to provide creative solutions to address the various challenges and opportunities facing auto dealership owners throughout the country.”
Pinnacle Mergers & Acquisitions president Mike Sims served as the financial advisor and Brunini Law Firm served as legal counsel to Herrin-Gear.
Holland & Knight LLP and Kirkland & Ellis LLP served as legal counsel to Open Road and Bain Capital.
