The rush of mergers and acquisitions to close 2020 continued on Thursday with a development involving Wolters Kluwer and eOriginal.
According to a news release, Wolters Kluwer Governance, Risk & Compliance (GRC) has signed an agreement to acquire eOriginal, a leading provider of cloud-based digital lending software. It’s a deal the company said is for approximately €231 million in cash.
The announcement indicated completion of the transaction is subject to customary closing conditions and expected before the end of the year. The transaction will be completed through the purchase of eOriginal’s parent company, Paperless Transaction Management.
Company officials explained the acquisition extends GRC Compliance Solutions’ position in loan document generation and analytics into the fast-growing digital loan closing and storage adjacency.
Wolters Kluwer described eOriginal as a “trusted leader” in digital lending technology, serving more than 650 customers in the U.S., including banks, mortgage lenders, consumer lenders, and auto and equipment finance companies.
The eOriginal platform can enable finance companies and their partners to create, store and manage digital assets from close through to the secondary loan market. GRC’s Compliance Solutions business has had a strategic partnership with eOriginal since 2016, which allows the integration of eOriginal’s electronic vaulting and closing software with Expere.
Officials went on to highlight the offerings of eOriginal and GRC Compliance Solutions are highly complementary and together will form an industry leading end-to-end digital lending platform.
The company also mentioned eOriginal expects to achieve revenues of approximately €31 million in 2020 — an unaudited projection — of which almost 95% is recurring and cloud-based in nature.
Wolters Kluwer pointed out revenues have grown at a double-digit organic growth rate in the last three years.
Officials predicted the acquisition should deliver a return on invested capital (ROIC) above Wolters Kluwer’s after tax weighted average cost of capital (WACC) of 8% within three to five years from completion and is expected to have an immaterial impact on Wolters Kluwer adjusted earnings in the first full year.
The company recapped that eOriginal was founded in 1996. It’s based in Baltimore and has approximately 100 employees. Its solutions include eAsset, SmartSign and ClosingCenter.
“Borrower preferences, competition among lenders, and changing regulations are driving increased digitization of the lending workflow. eOriginal is well-positioned to take advantage of these systemic trends,” said Steven Meirink, executive vice president and general manager of compliance solutions at Wolters Kluwer GRC.
“The acquisition positions us as the leading provider of digital lending solutions, spanning all workflows from loan approval, to document preparation and closing, with compliance certainty,” Meirink continued in the news release.
Brian Madocks, chief executive officer of eOriginal, added, “eOriginal is a leader in digital loan solutions with a proven track record of growth and customer adoption.
“Digital lending continues to grow across all industries. Customers want and need purpose-built digital solutions that are complete and compliant,” Madocks went on to say. “The combination of eOriginal and Wolters Kluwer provides exactly that — the right solution, in the right market, at the right time.”
This development arrived on the heels of several other announcements, including:
— CarGurus to buy 51% stake in CarOffer
— Kingsway completes acquisition of PWI Holdings
— S&P Global and IHS Markit announce merger
— J.D. Power closes purchase of ALG
Also included in a series of notable transactions this week, Kingsway Financial Services announced the closing of its acquisition of PWI Holdings, culminating a move first made public back in October.
The previously announced purchase price of the KAR Global F&I entity was $24.5 million. Kingsway said it financed the acquisition and the payoff of a legacy loan with a combination of debt financing provided by CIBC Bank USA and cash on hand. The holder of that legacy loan — Kingsway Warranty Holdings — borrowed a total of $25.7 million, $24.7 million in the form of a term loan and $1 million in the form of a revolver.
Fueled by those financial resources, Kingsway’s portfolio now includes PWI Holdings, collectively with its subsidiaries Preferred Warranties, Superior Warranties, Preferred Warranties of Florida and Preferred Nationwide Reinsurance Co.
Company leadership said the addition of PWI further strengthens Kingsway’s position in the vehicle service contract and extended warranty industry.
“PWI is an excellent complement to Kingsway’s portfolio of vehicle service contract and extended warranty businesses,” Kingsway president and chief executive officer J.T. Fitzgerald said in a news release. “PWI has shown that it has the ability to continue its strong financial performance in spite of the challenges posed by the ongoing pandemic. We look forward to helping the PWI team continue to grow their business.”
For the 12-month period ending Sept. 30, the news release indicated PWI had $4.2 million of unaudited GAAP income before income taxes and $6.6 million of unaudited non-GAAP EBITDA
Even after taking into consideration the anticipated effects of purchase accounting and anticipated increases in expenses on a standalone basis, Kingsway said it expects the acquisition to be accretive.
“We are thrilled to join the Kingsway team,” said PWI president Edmund Field, who has been in the position since August 2018. “The Kingsway model of buying businesses with an eye toward long-term growth and value creation makes Kingsway the perfect home for PWI. I look forward to working with J.T. and the rest of the Kingsway team going forward.”
KAR Global purchased PWI in 2013 from Harbert Private Equity Fund II, LLC. At that time, Preferred Warranties, it markets vehicle service contracts through independent dealers in 2,200 locations in 15 states throughout the Mid-Atlantic, Midwest and South.
Since that juncture, PWI’s operations grew to include more than 3,000 independent dealerships to include major markets such as Los Angeles and Minneapolis.
“Under KAR’s ownership, PWI has emerged as a leader in the vehicle service contract and extended warranty sector, and I believe we can further strengthen that position going forward,” Fitzgerald said in a news release announced the company’s intention in October.
“PWI is an excellent example of our capital allocation philosophy at work. We expect to pay a reasonable price for a business that we believe can generate high returns on our invested capital. I’m confident that PWI will be an excellent addition to our already solid portfolio of warranty holdings,” he went on to say.
Kingsway’s acquisition came amidst a series of moves following Thanksgiving that also included:
— S&P Global and IHS Markit announce merger
— J.D. Power closes purchase of ALG
— Hertz set to sell Donlen for at least $825M
— Francisco Partners to pay $1.45B for CDK’s international business
Make that four acquisitions so far this year for National Auto Care.
NAC, which has provided F&I products, administration, consulting services, training and marketing support to independent agents, insurance companies, financial institutions, third-party administrators and credit unions for more than 35 years, announced on Wednesday that it has acquired Coffeen Management Co., an independent automotive F&I agency based in Texas.
NAC now has acquired four firms since July, including last week’s move involving Assurance Marketing, Inc., an independent automotive F&I agency based in Oklahoma that has provided products, services and training to dealers for 30 years. NAC also added Excel Auto Partners out of North Carolina in August and Chicago-based Diversified Management Group in July.
National Auto Care indicated that Coffeen’s executive team including president David Hopkins will continue to manage the day-to-day operations of CMC’s Dallas-area office, bolstering the marketing, salesforce training and logistical support that NAC can offer dealerships in this market. Henry Coffeen founded in 1987.
“Working with Henry and the CMC team has been an honor. I am truly excited about our future together as one team” National Auto Care senior vice president Courtney Wanderon said in a news release.
NAC chief executive officer Tony Wanderon added, “With a team full of seasoned F&I professionals who all bring significant and diverse industry experience, CMC shares a kindred spirit with National Auto Care. I am excited to bring them into the NAC family.”
Both Hopkins and Henry Coffeen shared their perspectives on Wednesday’s development.
“This relationship with National Auto Care gives me the opportunity to maintain CMC and its legacy. I know that we will continue to be in a position of strength with NAC, along with CMC President David Hopkins and my entire team who will continue to put our loyal clients first,” Coffeen said.
And Hopkins went on to say, “An acquisition like this puts CMC in the position to be better and stronger, and to offer more options to our clients. They will always be our top priority, and I look forward to offering them new resources with the backing of NAC and the same objective guidance for what is best for their businesses.”
For more information, visit nationalautocare.com.
This year’s turmoil certainly isn’t slowing acquisition activity by National Auto Care.
This week, NAC announced its third acquisition since July, finalizing a deal to secure Assurance Marketing, Inc., an independent automotive F&I agency based in Oklahoma that has provided products, services and training to dealers for 30 years.
The moves arrived after NAC added Excel Auto Partners out of North Carolina in August and Chicago-based Diversified Management Group in July.
NAC chief executive officer Tony Wanderon said AMI further accelerates NAC’s growth strategy, which includes the acquisition of like-minded, high-growth agents.
AMI principal Cory Baze will continue to manage the day-to-day operations of AMI’s Oklahoma City office, further solidifying NAC’s presence there and bringing decades-long relationships with dealerships nationwide that will enrich services offered by NAC.
“We have long considered Cory and his team a part of the extended NAC family, and I am excited to officially have them join us,” Wanderon said. “Our companies share the same values, and we both pride ourselves on an unwavering commitment to our clients. NAC and AMI are a natural fit.”
AMI offers a full suite of F&I protection products to its dealer customers as well as sales training, innovative technology and professional administration. The experienced team at AMI is also the most recent recipient of NAC’s Agent of the Year award, taking home the prize in 2019.
“Cory Baze and the team at AMI have been such an integral part of National Auto Care’s business from the very beginning,” National Auto Care senior vice president Courtney Wanderon said. “They have consistently been one of our top-performing agencies, and I know that this acquisition will enable both of our businesses to reach new heights in the coming years.”
Baze also commented on what the acquisition means for the firm and its clients.
“I have trusted the people at NAC to take care of our dealer clients and their customers for more than 25 years. They have always been an outstanding industry partner, and our team looks forward to the success we will enjoy as part of the NAC Family,” Baze said.
Quite an example of public negotiating surfaced on Thursday, with a subprime auto finance company that’s been in operation for nearly 30 years being called “significantly undervalued.”
Auto Experience, a firm led by one of the founders of Exeter Finance and created in 2018 to pursue strategic business opportunities in the auto financing market, announced it has informed the board of directors of Consumer Portfolio Services of its interest in acquiring the company in an all-cash transaction.
The bid is valued at $135 million, and Auto Experience said the proposed acquisition at that price would nearly double the current value of the Nasdaq-listed company.
Auto Experience said it proposes to acquire CPS for approximately $6.18 per share of common stock. CPS shares closed at $3.35 on Wednesday, according to a news release.
In its letter to the company, Auto Experience asked for a response from the CPS board by Oct. 30.
CPS reported on July 21 that its second-quarter earnings totaled $3.0 million, or $0.13 per diluted share. Also during the quarter that ended on June 30, CPS indicated that it purchased $135.9 million of new contracts as its receivables totaled $2.326 billion.
In its letter to CPS, Auto Experience said it would add value to the company and its shareholders by re-engineering aspects of CPS’s operations, applying proprietary technology and enhanced digital capabilities as the market increasingly shifts online and employing a combination of existing resources and new leadership steeped in automobile financing and digital commerce.
“Acquiring Consumer Portfolio Services and leveraging our strategic and operational experience in auto financing and enterprise technology will create a strong national player that already has a toe-hold in more than 8,000 automobile dealerships across the U.S.,” Auto Experience president and chief executive officer Samuel Ellis said.
“CPS is significantly undervalued based on a range of performance measures and upside growth opportunities, and we believe our proposed acquisition would be materially beneficial to shareholders and, over the longer run, to consumers and dealers,” Ellis continued.
Ellis certainly is quite familiar with subprime auto financing.
Ellis was previously the founder and CEO of Dallas-based DriverUp, an online marketplace focused exclusively on auto finance. Earlier, he was founder and CEO of Exeter Finance. And for nearly a decade, Ellis served as senior vice president of risk management for GM Financial and AmeriCredit.
Protective Life Corp. is pleased with the positive trajectory of Protective Asset Protection, so the company made a move to enlarge its F&I division on Friday through an acquisition.
The company, which also is a wholly owned U.S. subsidiary of Dai-ichi Life Holdings, announced it has reached an agreement to acquire the Revolos family of companies.
“Protective’s Asset Protection Division is an important — and growing —part of our business,” Protective president and chief executive officer Rich Bielen said in a news release. “As we continue to navigate the uncertain situation posed by COVID-19, we remain focused on serving more customers.
“This transaction aligns well with our plans to build on our strong foundation and protect more people in the future by growing both organically and through acquisitions,” Bielen continued.
When closed, this transaction will represent Protective’s 58th acquisition. It will be the fifth transaction completed since Protective became part of Dai-ichi Holdings in 2015.
Dai-ichi, which has more than $548 billion in total assets, considers Protective to be its North American growth platform and continues to aim for further expansion in the region, through both acquisitions and organic growth.
Subject to the receipt of regulatory approvals and satisfaction of customary closing conditions, officials said the closing of the acquisition is expected to occur in the first quarter of next year.
Revolos is a diversified, full-service F&I provider that offers a suite of products that complement Protective’s existing portfolio and distribution channels.
“Protective is a well-known, respected and leading provider of finance and insurance (F&I) solutions to the markets we serve,” Revolos chief executive officer Rich Holland said.
“Becoming part of the Protective family is an exciting step on our company’s journey, and we look forward to the benefits this opportunity will provide our team members, partners and customers,” Holland said.
Protective Asset Protection has been providing F&I solutions to the automotive industry for more than 55 years. Its programs include, among other areas, extended service contracts, guaranteed asset protection (GAP) and ancillary products to protect consumers’ investments in automobiles, recreational vehicles, watercraft and powersports vehicles.
Protective Asset Protection also offers a robust portfolio of dealer participation programs, training and technology solutions through a network of general agents as well as a direct sales force.
“Revolos has built a strong organization with a focus on meeting the needs of agents, dealers and financial institutions,” Protective Asset Protection president Scott Karchunas said.
“We are excited about the opportunity to grow market share and protect more customers by adding Revolos’ complementary product portfolio and distribution channels to our current business lines,” Karchunas went on to say.
Maynard, Cooper & Gale, P.C. acted as external legal counsel for Protective in this transaction.
Reed Smith LLP acted as external legal counsel for Revolos in this transaction, and Houlihan Lokey acted as financial advisor to Revolos in the transaction.
For the second time in less than a month, National Auto Care has grown its F&I business through an acquisition.
According to a news release distributed on Tuesday, National Auto Care chief executive officer Tony Wanderon and Sharron Anania, the principal of Excel Auto Partners, announced that NAC has acquired the assets of Excel.
Excel is an independent F&I agency based in North Carolina that has successfully driven profits for its dealership clients since the agency’s founding in 2012.
The acquisition arrived just a few weeks after NAC acquired Diversified Management Group (DMG), an independent F&I agency based in Chicago.
NAC indicated that Anania will continue to manage the day-to-day operations of Excel’s Raleigh, N.C., office, helping expand NAC’s presence there, and she will bring a wealth of knowledge in training and sales that will bolster sales leadership within NAC.
“I have had the pleasure of knowing Sharron for many years,” NAC senior vice president Courtney Wanderon said. “She has been a valued agency partner of ours in the North Carolina market with an outstanding work ethic and a proven ability to support and train her clients with a focus on compliance and profitability, making her one of the best in the business today.”
NAC mentioned the transaction officially closed Aug. 7.
The company highlighted Excel’s strengths include analyzing, developing and enhancing programs and training for automotive dealers. Additionally, Anania is an accredited member of the Association of Finance and Insurance Professionals (AFIP).
“Excel Auto Partners and National Auto Care share so many important core values. With my experience and expertise, plus NAC’s strong reputation in the industry for innovation, technology and customer service excellence, I am confident this will be a successful partnership,” Anania said.
Tony Wanderon added, “Sharron’s experience and commitment to the industry and to her clients was a key driver in our decision to acquire Excel Auto Partners. In addition, it was clear that our cultures aligned as it related to putting our customers first. I am excited for Sharron and her team to join the NAC family.”
National Auto Care broadened its F&I portfolio this week.
National Auto Care chief executive officer Tony Wanderon and Chris Weber and James Jodison, the principals of Diversified Management Group (DMG), announced that National Auto Care has acquired DMG.
DMG is an independent F&I agency based in Chicago that has successfully driven profits for its dealership clients since the agency’s founding in 2002.
According to a news release, Weber and Jodison will continue to manage the day-to-day operations of their Illinois office with the added support of NAC’s products and claims management capabilities.
By combining with NAC, the executives see DMG’s growth will be further accelerated through offering a wider array of value-added products, services and technology to its existing and new dealer relationships.
“With its dedication to outstanding client service and product innovation, Diversified Management Group is an ideal fit with the NAC team. Its culture and commitment to growth are fully aligned with NAC’s values and objectives, and I am excited to begin our partnership,” National Auto Care senior vice president Courtney Wanderon said. “NAC is committed to a high-growth strategy of supporting our core agency relationships across the country as well as making strategic acquisitions of like-minded agencies.”
Tony Wanderon added, “We are excited about the acquisition of Diversified Management Group. DMG’s values and commitment to excellence make it a natural fit with the NAC team, and we look forward to working with Chris and James.”
The DMG leadership team has more than 60 combined years of experience in bringing innovative products and tools to assist dealers in meeting their customers’ needs.
“We have been privileged to serve such fantastic dealership clients for many years, and we are honored to begin the next chapter of our growth with National Auto Care. We believe this partnership creates opportunities for us that we have not seen elsewhere across the industry,” Weber said.
For more information, visit nationalautocare.com.
Portfolio has officially acquired National Automotive Experts and NWAN, uniting two leaders in the F&I product provider, administration and reinsurance space and closing an agreement initially announced in March.
Portfolio president and chief executive officer Brent Griggs noted the world has changed unalterably since the companies first announced the move.
“The pandemic has affected every aspect of our operations. However, our shared interest in protecting and supporting our dealers, distribution partners and end customers has not wavered,” Griggs said in a news release distributed on Wednesday.
“The fact that we prevailed through numerous additional hurdles on our way to closing is a testament to our determination to make this transaction happen from our very first discussions with NAE and our shared goal of creating the leading F&I provider in the country,” he continued.
NAE/NWAN founder and CEO Kelly Price added, “Our complementary footprints and offerings were apparent from the outset. We could not have found a better partner.
“Both companies have been made stronger by our union and we look forward to writing our next chapter together,” Price went on to say.
The transaction was facilitated with assistance from Abry Partners, the Boston-based private equity firm that acquired a majority interest in Portfolio in 2019, and Houlihan Lokey, which advised NAE/NWAN. Kirkland & Ellis served as legal advisor.
“This acquisition joins the efforts of two leaders in a competitive space,” said Brent Stone, a senior partner at Abry. “The combined companies’ talent and resources are without equal and the future is bright.”
The journey of Open Lending being acquired by Nebula, a special purpose acquisition company sponsored by True Wind Capital, that began back in January climaxed this week as the business combination was approved by Nebula’s shareholders at an “extraordinary” general meeting
With the business combination completed, Nebula changed its name to Open Lending, and its common stock was expected to begin trading on the Nasdaq Stock Market under the ticker symbol LPRO on Thursday. Officials said late on Wednesday that the share price closed at $13.35, representing an increase of approximately 30% from Nebula’s closing share price on June 5.
The development began with an announcement back on Jan. 6 when Open Lending and Nebula stated that entered into a definitive business combination agreement. Under the terms of the agreement, Nebula was to acquire Open Lending through a new Delaware holding company, which was to become a publicly-listed entity with an implied estimated enterprise value at closing of approximately $1.3 billion.
That January announcement indicated the consideration payable to the stockholders of Open Lending would consist of a combination of cash and shares of common stock of the company. In addition to the $275 million of cash held in Nebula's trust account (assuming no redemptions), additional investors committed to participate in the transaction through a $200 million private placement of common stock at $10 per share anchored by True Wind and several “noteworthy and leading” fundamental investors.
To recap, Open Lending is an enablement platform for the automotive finance market powered by proprietary data, advanced decisioning analytics, an innovative insurance structure and scaled distribution. The platform can enable near-prime consumers, — which officials estimate at approximately 50% of the market — to finance their vehicles at more attractive rates when compared to traditional lending alternatives, while presenting a similar risk profile to the finance company as that of a prime borrower.
Furthermore, Open Lending's technology platform can unlock value for a diverse partner ecosystem, benefitting dealers, finance companies, insurers and OEMs. Through the platform, Open Lending facilitated more than $1.7 billion of paper in 2019 for more than 275 finance companies.
As a result of the business combination, this week’s announcement indicated Open Lending’s management team — led by cofounder, president and chief executive officer John Flynn and cofounder, chief financial officer and chief operating officer Ross Jessup — will continue to lead the company.
The announcement also mentioned that Nebula co-chairman and co-chief executive officer Adam Clammer will serve as a director on the combined company’s board of directors.
Also of note, Open Lending’s existing minority investor, Bregal Sagemount, a growth equity firm, will continue as a public stockholder and participate on the board as well, according to the company.
“We are pleased to complete the combination and look forward to partnering with John, Ross, and the rest of Open Lending’s management team at this exciting inflection point in the company’s growth,” Clammer said. “Our team believes that management has built an extraordinary business and we’re excited to support them along their public market journey.”
Flynn added, “The past 15 years, and especially the past few months, have shown how incredible our team is and how significant the opportunity in front of us is to grow this business. We are excited to partner with our new board of directors and investors as we continue to execute on Open Lending’s growth plan as a public company.
“We believe the public warrantholders’ decision to maintain their investment in company is further evidence of the value of Open Lending,” Flynn went on to say.
Financial Technology Partners and FTP Securities served as strategic and financial advisor and Goodwin Procter as legal counsel to Open Lending in connection with the transaction.
Deutsche Bank Securities and Goldman Sachs & Co. acted as capital markets advisors, financial advisors, and private placement agents, and Greenberg Traurig acted as legal counsel to Nebula in connection with the transaction.
