An acquisition in the F&I space first announced back in December came to a conclusion this week.
Officials from iA Financial Corp., the holding company of iA Financial Group, said they have finalized the acquisition of IAS Parent Holdings Inc. and its subsidiaries through a $720 million agreement announced on Dec. 4.
Based in Austin, Texas, IAS is one of the largest independent providers of solutions in the U.S. vehicle warranty market with more than 35 years of history. IAS provides a comprehensive portfolio of vehicle warranties and related software and services sold through one of the industry’s broadest and most diverse distribution networks consisting of more than 4,300 dealers in all 50 states.
“We are pleased to announce the completion of the acquisition of IAS and to welcome its high-quality management team within iA Financial Group,” iA Financial Group president and chief executive officer Denis Ricard said in a news release.
“By combining the complementary strengths of IAS and of our existing warranty business in the U.S., we will be well positioned for the growth opportunities that may arise in this highly fragmented market,” Ricard continued.
IAS president and chief executive officer Patrick Brown added, “I am proud of our entire team and their hard work and growth over the last few years.
“With the strength and resources of iA, we look forward to continuing to grow and providing the best products and services in the industry to our long-standing partners and customers,” Brown went on to say. “We’re excited for the opportunities that lie ahead as a part of the iA family and can’t wait to get to work.”
The company mentioned the $720 million purchase price, for which a currency hedge was put in place, has been funded by iA Financial Group’s excess capital. Following the closing of the acquisition and of iA Investment Counsel’s sale which is expected to close during the second quarter of 2020, iA Financial Group insisted that it will maintain a sound capital position with a pro forma solvency ratio as at March 31 of 121%, above its target range of 110 to 116%.
Meanwhile, Genstar Capital — a leading private equity firm focused on investments in targeted segments of the financial services, healthcare, industrial and software industries — shared its perspective on the transaction involving IAS, which the firm acquired nine years ago.
“IAS has been an incredibly successful long-term investment for us since our acquisition in 2011,” Genstar president and managing director Ryan Clark said in a separate news release. “We are pleased with the evolution of IAS into one of the leading automotive warranty platform businesses.
“IAS’ leadership under our ownership, first Bob Corbin and then Patrick Brown, delivered organic growth, strategic acquisitions, additional product lines, and best-in-class technology solutions. We want to thank Patrick, Bob and the entire IAS team for their efforts that led to this successful outcome,” Clark continued.
In that news release, Brown also added, “The benefits of our partnership with Genstar can be seen through a variety of growth metrics, including increases in our coverage volume, premiums written, elevated customer service and most importantly empowering more vehicle owners with peace of mind during their ownership period.
“We’re grateful to the Genstar team for their support and excited for the growth opportunities that lie ahead as we join the iA family,” Brown went on to say.
Assurant continues to be in long-term growth mode via acquisitions.
On Tuesday, the firm that offers F&I products, training and other educational services announced it has acquired American Financial & Automotive Services (AFAS), a provider of F&I products and services, including vehicle service contracts, guaranteed asset protection insurance and other ancillary products sold directly through a network of nearly 600 franchised dealership clients across 40 states.
Assurant explained in a news release that it has been the primary provider of vehicle service contracts and related auto products and services sold by AFAS for more than 20 years. AFAS chief executive officer and founder Arden Hetland, along with the AFAS management team, will join Assurant upon the closing of the transaction, according to the announcement.
“Following our acquisition of The Warranty Group, our agreement to acquire AFAS further underscores our confidence in the long-term growth potential of the global automotive market,” said John Laudenslager, president of Assurant Global Automotive.
“Having Arden and his team join Assurant gives us the benefit of their years of experience and expertise, which we will count on as we continue to grow the business together,” Laudenslager continued.
With nearly 2 million vehicle service contracts in place, executive also highlighted AFAS will provide greater scale and operating efficiencies and the ability to benefit from long-term favorable market trends that support increasing vehicle service contract attachment rates.
Headquartered in Houston, AFAS has more than 200 employees and looks to differentiate itself competitively within the auto third-party administrator distribution channel with its tenured field force, extensive dealer training programs, technology platforms and 40 years of industry leadership.
Hetland will lead the AFAS business, focusing on delivering an even more superior client experience.
“Joining Assurant enables AFAS to benefit from the global expertise, scale and breadth of an industry leader,” Hetland said.
“Having partnered with us for so many years, they clearly value our team’s depth of experience and high-touch relationship approach, which are key factors in our shared commitment to servicing clients and growing the business,” Hetland went onto say.
The announcement also mentioned AFAS will retain its brand and continue to operate as a separate direct-to-dealer channel under Assurant Global Automotive, throughout a multi-year transition process.
“The transition will focus on building a seamless customer experience that integrates the best of each company’s offerings,” the companies said.
Safe-Guard Products International, a provider of third-party private label protection products for the automotive, RV, marine and powersports industries, announced an investment in the company by funds managed by Stone Point Capital.
According to a news released distributed this week, Safe-Guard noted that affiliates of the Goldman Sachs Group — which first invested in Safe-Guard in 2012 — will continue to own a minority interest in the company.
Based in Atlanta, Safe-Guard manages protection product programs for more than 50 strategic partners across the U.S. and Canada, offering a full suite of protection products in the automotive, powersport, RV and marine industries. The company said more than 13 million consumers are protected under contracts by Safe-Guard.
“Safe-Guard is in the unique position to welcome Stone Point Capital as a new investor with deep industry experience, while continuing our successful relationship with Goldman Sachs through its renewed investment,” Safe-Guard chief executive officer Randy Barkowitz said.
“With continued development of people, product, technology, and our service infrastructure, we remain committed to delivering innovative solutions and value-added customer support to our strategic partners and customers.”
Stone Point Capital owns and invests in leading companies within the financial services and related industries.
“Since its inception, Safe-Guard has placed a premium on service and innovation, which has led to the company’s remarkable growth,” Stone Point Capital chief executive officer Chuck Davis said.
“We are pleased to invest in the company as it commits to further enhance the technology, infrastructure, and service that has made Safe-Guard the market leader,” Davis continued. “We look forward to a strong partnership with the Safe-Guard team and Goldman Sachs.”
Officials reiterated that the Goldman Sachs Merchant Banking Division acquired Safe-Guard in 2012 and will retain a significant stake in the company.
“We are extremely proud of the growth that Safe-Guard and its management team have achieved during our ownership period, which has solidified the company’s position as the category leader in its space in North America,” said Sumit Rajpal, co-head of Goldman Sachs Merchant Banking Division.
“Safe-Guard is well-positioned to continue its stellar growth under its talented and experienced management team led by Randy Barkowitz, and we are excited to partner with Stone Point Capital in continuing our journey with the company,” Rajpal went on to say.
Goldman Sachs and Jefferies acted as joint financial advisers, and Davis, Polk & Wardwell acted as legal counsel to Safe-Guard.
Debevoise & Plimpton LLP and White & Case acted as legal counsel to Stone Point Capital.
iA Financial Corp., one of Canada’s largest insurance and wealth management companies, secured a larger amount of the dealer warranty business in the United States last week.
According to a news release, iA Financial, the holding company of iA Financial Group, announced today that it has entered an agreement to acquire the American company IAS Parent Holdings and its subsidiaries. The agreed purchase price is $720 million.
Based in Austin, Texas, IAS is one of the largest independent providers of solutions in the U.S. vehicle warranty market with more than 600 employees and more than 35 years of history. IAS provides a comprehensive portfolio of vehicle warranties and related software and services sold through one of the industry’s broadest and most diverse distribution networks consisting of over 4,300 dealers in all 50 states.
iA Financial highlighted this acquisition is highly complementary to the company’s existing warranty operations in the U.S. with respect to product suite, distribution networks and geographic scope. At the beginning of 2018, the company finalized its purchase of Dealers Assurance Company and Southwest Reinsure Inc., a company collectively known as DAC.
Denis Ricard, president and chief executive officer of iA Financial Group, explained the synergies from the combined operations will create a true center of excellence in dealer services that will provide a platform for future growth.
“This transaction leverages the expertise and experience in dealer services that iA Financial Group has built over the last 20-plus years in Canada and more recently in the U.S. through the acquisition of Dealers Assurance Company in 2018,” Ricard said in the news release.
“The U.S. market for extended auto warranties, valued at almost $39 billion, is highly-fragmented and provides significant opportunity for organic growth and consolidation,” he continued. “Our investment in IAS will enable us to be a best-in-class provider of vehicle warranty products and services.”
The company said this acquisition will be funded by iA Financial Group’s excess capital. After the transaction closes, the pro forma solvency ratio of the company will 117%.
The company expects the contribution from this acquisition to be neutral to earnings per share in the first year and accretive as of the second year.
iA Financial this transaction is expected to close in the first half of 2020, subject to obtaining the usual regulatory approvals in Canada and the United States, and other customary closing conditions.
“We look forward to this new chapter in our U.S. expansion with great optimism, combining IAS with our already well-established presence in the United States and leveraging our strong track record in dealer services in Canada,” said Mike Stickney, chief growth officer of iA Financial Group and head of the company’s U.S. operations since 2005.
“This acquisition expands our customer offering by bringing an end-to-end product suite and omni-channel distribution, as well as reinforcing our national breadth,” Stickney continued. “Along with the high-quality senior management of IAS who will be joining our organization, we will have the platform to pursue our growth strategy in the vehicle warranty market in the United States.”
Patrick Brown, president and chief executive officer of IAS, touched on what the acquisition means for that operation.
“The IAS team is excited to become part of the iA family. I am very proud of our team’s hard work and record growth the last few years,” Brown said.
“Going forward, as part of a publicly traded company with a market capitalization of more than $7.0 billion, we are well-positioned to continue the long-term support of our valued distribution partners and to deliver on our mission of empowering vehicle owners to avoid unforeseen repair costs,” he went on to say.
A banking merger first announced back in February finally received a blessing from federal regulators on Tuesday.
The Federal Reserve Board met and approved the application by BB&T Corp. of Winston-Salem, N.C., to merge with SunTrust Banks of Atlanta, becoming Truist Financial Corp., as the potential provider for dealerships’ commercial financing and indirect auto financing needs.
According to a news release, BB&T and SunTrust expect to complete the merger on Dec. 6, pending satisfaction of customary closing conditions.
Upon completion of the merger, officials said Truist will be the sixth-largest U.S. commercial bank, serving approximately 10 million U.S. consumer households and a full range of business clients, with leading market share in many of the most attractive, high-growth markets in the country.
The regulatory approval process also included approvals from The Georgia Department of Banking and Finance and the North Carolina Commissioner of Banks. The U.S. Department of Justice completed its antitrust review earlier in November as part of an agreement to divest branches in North Carolina, Virginia and Georgia.
The Fed explained that it evaluated the application under the factors it is required to consider under the Bank Holding Company Act, including the financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal. The Fed added that its approval is conditioned on several actions, including that BB&T must divest 30 branches and more than $2.4 billion in deposits to mitigate the competitive effects of the merger.
No further regulatory approvals are required to complete the merger of BB&T and SunTrust and all related subsidiaries, according to officials.
“We are pleased to have received regulatory approval to merge two strong companies with complementary business models and a high level of cultural alignment. We’ll be even better together for our clients, teammates, communities and shareholders,” said BB&T chairman and chief executive officer Kelly King, who will serve as chairman and CEO of Truist.
In the same news release, SunTrust chairman and CEO Bill Rogers added, “We will build upon our mission- and purpose-driven cultures and work to ensure a positive experience for our clients.
“Following months of thoughtful collaborative planning, we are prepared to begin a successful integration,” continued Rogers, who will be president and chief operating officer of Truist prior to succeeding King as CEO in September 2021.
The executives added clients will continue to be served through their respective BB&T or SunTrust branches, websites, mobile apps, financial advisors and relationship managers as systems are integrated. The conversion to the Truist brand will occur over the next two years.
And in a related development also surfacing on Tuesday, the Fed said in its news release that it issued a consent order against SunTrust for unfair and deceptive practices.
As detailed in the order, the Fed asserted that SunTrust made misleading or inaccurate statements between 2013 and 2017 to certain business customers about the operation and billing for certain add-on products. SunTrust previously terminated these practices and, since 2016, has repaid approximately $8.8 million in fees to customers.
“As a condition of the merger, BB&T has committed that the resulting bank will comply with the enforcement action, including implementing procedures to verify the refunds and providing additional refunds, if required,” Fed officials said.
American Recovery Association executive director Les McCook has proven to be quite prophetic stemming from a comment he made during the Innovations in Recovery Summit hosted by ALS Resolvion in late September.
McCook said, “In the next 24 months, there will be significant changes in the industry.” Turns out, McCook’s assertion not only came to be, but it also involved the forwarding company hosting that event.
ALS Resolvion and Del Mar Recovery Solutions on Monday morning announced the completion of a definitive merger agreement.
According to a news release sent to SubPrime Auto Finance News just ahead of the opening of Used Car Week 2019 in Las Vegas, the combined company will operate under the name Resolvion and will create one of the largest repossession management companies in the industry. The combined company now includes:
—More than 200 clients, including more than 40 of the Top 50 auto finance companies in the country
—Approximately 1 million repossession assignments annually
—More than 250,000 recoveries completed annually
The combined entity will be led by Michael Levison and Joshua Elias. The other senior managers of Resolvion include:
—Scott Darling, chief operating officer
—Keith Yarnell, chief information officer
—Ren Zamora, chief financial officer
—Jose Mendiola, executive vice president of consumer division
—Rod Browning, executive vice president of strategic initiatives
—Doug Melson, executive vice president of commercial division
—Claudia Plascencia, senior vice president of client services
“Combining these two companies makes tremendous sense,” Levison said in the news release. “Both are leaders in the industry, share a similar operating philosophy, and bring strong teams to our client relationships.
By combining operations, we are able to invest more in performance improvement and we will be able to take our respective compliance capabilities to new levels while, at the same time, improving operating efficiency,” Levison continued.
Elias shared his perspective on Monday’s development, too.
“I am really looking forward to working with Mike Levison and the ALS Resolvion team to bring our combined client base superior results, uncompromising service and industry-leading compliance,” Elias said.
“Scale has become very important in this industry and the merger with ALS Resolvion allows us to offer lenders exciting new capabilities and meet the industry’s growing need for operating efficiencies,” Elias went on to say.
The company said it will continue to operate their existing offices in Charlotte, N.C., Carlsbad, Calif., Atlanta, Las Vegas and Shelton, Conn.
The Maxim family is embarking on its next endeavor in the F&I space.
In a joint news release distributed last week, Hunter Malone, owner of DealerMax, announced the sale of his firm’s assets to Jim Maxim Jr. and Jim Maxim Sr.
Profit By Design, the Maxim family enterprise out of Wayne, Pa., purchased the company assets in a cash sale and will use the DealerMax brand to market the company’s dealership training and F&I income development programs to an expanded network of dealerships nationally.
The sale comes as dealerships seek to bolster profitability in a response to downward pressure on vehicle margins. Hunter, President of DealerMax, concurred,
“Now is the right time for this,” Malone said. “Profit By Design and the Maxim team have a great formula for increasing dealer margins in sales and F&I. The company offers dealerships some of the most respected F&I training programs on the market today, and I am proud that the name will carry on with a family owned business with integrity.”
Jim Maxim Jr. formally ended his dual role as president of MaximTrak and chief digital officer for RouteOne on Aug. 1 after a 33-month transition period post-sale. Maxim intends to build upon his family’s 40-years of history in the automotive industry and grow the company platform.
As CEO of the combined entity, now branded DealerMax, Maxim intends to grow the business and employee base in the greater Philadelphia market and looks to expand operations in major metro markets regionally. The Profit By Design name will live on and become the program name for its F&I income development offering as the company looks to expand its services into digital retail consulting and sales and management training.
Jim Maxim Jr. said, “The opportunity for growth as well as the talent, and expertise of our people at Profit By Design is what drew me back to the family business. We have employees that have been with us for over 30 years and it is an honor to lead the company into this new era of growth and expansion.”
Maxim continued, “The re-imagination of the customer experience that is taking place within the automotive industry right now is very exciting. Dealers need best practices, proven processes and excellent training for employees to help them transition and succeed with today’s consumer. We intend to expand our offering to help our dealers thrive in the rapidly changing marketplace.”
DealerMax has announced multiple openings in partner markets including Pittsburgh, Boston, Rochester and Syracuse, N.Y., Washington D.C., Baltimore as well as New York City and nearby markets in Connecticut and New Jersey. Interested candidates can apply at www.dealermax.com/careers.
Two F&I product providers that might be familiar to nearly 15,000 dealerships are joining forces via an acquisition.
This week, Amynta Group, an insurance services company and provider of warranty protection products, entered into an agreement to acquire American Auto Guardian (AAGI), another provider of protection products and services to an extensive network of OEMs, agents, independent dealers and dealer groups.
According to a news release, terms of the transaction were not disclosed. The company did say the transaction will be funded by a combination of debt, cash on hand and new equity invested by existing shareholders and Amynta management.
Amynta added closing of the transaction is subject to customary conditions and regulatory approvals.
Amynta highlighted AAGI is a recognized leader in developing, marketing and administering vehicle service contracts and other automotive aftermarket protection products. The company operates through approximately 250 distribution partners and serves more than 4,500 dealers across the U.S. The acquisition of AAGI aligns with Amynta’s commitment to provide best-in-class products and services to its distribution partners and dealers.
Together with AAGI, Amynta will serve approximately 15,000 dealerships in the U.S. and Canada through more than 1,400 agents, protecting more than 5.4 million vehicles. AAGI will continue to operate under the leadership of Tim Brugh and the company’s senior management team.
“AAGI has built an outstanding company over 20 years, focused on consistently delivering performance to their distribution partners and dealers, with a successful track record of growth and profitability under the leadership of Tim Brugh,” Amynta chairman and chief executive officer Rob Giammarco said.
“AAGI brings new distribution partners, OEM relationships, dealer networks and geographic reach, broadening our presence, particularly in the Midwest. AAGI expands our warranty offerings, providing incremental opportunities to drive growth across our business,” Giammarco continued.
Brugh, who is chief executive officer of AAGI, added, “Joining forces with Amynta is a great opportunity for AAGI, as the enhanced scale and reach will help us deliver even more capabilities to our distribution partners and dealers. I see many new opportunities for our clients, partners and employees.
“We are looking forward to joining Amynta and continuing to provide our clients and partners with best-in-class products and services and the ease of doing business they have come to expect,” Brugh went on to say.
BofA Merrill Lynch and MHT Partners served as financial advisors to Amynta, and Kirkland & Ellis served as legal advisor. Houlihan Lokey served as financial advisor to AAGI, and Bryan Cave Leighton Paisner served as legal advisor.
A firm that previously was a service provider for REPAY now is a part of the company.
Repay Holdings Corp., a provider of vertically integrated payment solutions, recently announced the acquisition of TriSource Solutions for up to $65 million, which includes a performance-based earn out.
REPAY said in a news release that the acquisition was financed with a combination of cash on hand and proceeds from borrowings under its existing credit facility.
TriSource, founded in 2007, provides back-end transaction processing services to independent sales organizations (ISO) and operates as a direct ISO on behalf of its owned portfolios and external sales agents. TriSource is headquartered in Bettendorf, Iowa, with an additional office in East Moline, Ill.
Since 2012, TriSource has been REPAY’s primary third-party processor for back-end settlement solutions and a valuable partner that has supported the company’s growth.
“TriSource will enable us to build more intelligent payment solutions and bring these solutions to our customers faster. Additionally, we see the potential for strong organic growth in TriSource’s back-end settlement business, and our long partnership with TriSource has illustrated its inherent value proposition,” REPAY chief executive officer John Morris said. “We are looking forward to leveraging TriSource’s capabilities to drive continued growth.
“Further, the acquisition enhances our M&A strategy, as having our own back-end transaction processing capabilities will allow us to reduce future targets’ transaction processing costs and to expedite other synergy realization efforts. The TriSource acquisition will be immediately and meaningfully accretive to earnings,” Morris went on to say.
REPAY recapped the transaction details, including:
—REPAY acquired TriSource for up to $65 million.
— Sixty million dollars was paid at closing.
— Up to $5 million is structured as a performance based earn out.
— The acquisition was financed with a combination of cash on hand and borrowings under REPAY’s existing credit facility.
— Annualized Adjusted EBITDA is expected to be approximately $7.0 million.
— Combined net leverage expected to be approximately 3.5 times on a post-transaction basis.
“TriSource owners Henry Harp and Bill Brockway, along with the company’s executive management team, have built a top-tier organization. I’ve had the pleasure of working alongside the TriSource team over the past seven years and believe adding them to the REPAY family will be beneficial to all parties,” REPAY president Shaler Alias said.
“I would like to take this opportunity to welcome them to our organization,” Alias added.
Commenting about the acquisition, TriSource Solutions chief operating officer Deborah Brown said, “We are excited to join the REPAY team.
“We have partnered with REPAY for many years and believe they will help us to accelerate our processing business growth. We look forward to working alongside the REPAY team to drive long term growth at the combined company,” Brown went on to say.
At the beginning of last year, loan origination system (LOS) provider defi SOLUTIONS announced it has raised $55 million in a Series C investment from Bain Capital Ventures. Then last September, Fiserv Lending Solutions announced the launch of its new brand identity as the joint venture between Fiserv and Warburg Pincus became Sagent Lending Technologies.
On Tuesday, defi SOLUTIONS and Sagent Auto — the auto financing solution and services business of Sagent Lending Technologies — announced they have signed an agreement to merge.
Executives said the resulting company — to be known as defi SOLUTIONS — will be uniquely positioned to elevate finance company and consumer experiences with a broad set of best-in-class products and services.
They also said the new defi SOLUTIONS will have the financial backing of Warburg Pincus, Bain Capital Ventures and Fiserv. Current Sagent Auto chief executive officer and board member Bret Leech will lead the merged company that operates today in both the U.S. and Canada, and he will continue as CEO of Sagent Lending Technologies.
“Uniting these companies is an exciting step in a long-term vision to empower the lending industry with solutions that enable clients to embrace the future. We’re offering our clients a compelling vision that brings together our strengths of agility, scalability, stability, compliance and entrepreneurial innovation,” Leech said in a news release.
This transaction is expected to close this month, according to the news release.
The new defi SOLUTIONS provides software solutions and services across all elements of the financing lifecycle: digital engagement, originations, servicing, loan and lease care, lease maturity management, remarketing and analytics. These offerings are tailored to the needs of captive lenders, national banks, regional banks, finance companies, credit unions and lending start-ups.
defi SOLUTIONS will be headquartered in Westlake, Texas, and will retain the current Sagent Auto locations in King of Prussia, Pa., and Amherst, N.Y.
“This merger has been designed to bring the best of today and tomorrow, while also minimizing disruption to our clients’ businesses,” said Stephanie Alsbrooks Hanson, founder and vice chair of defi SOLUTIONS.
Alsbrooks Hanson added that she will continue with defi SOLUTIONS, working to enhance relationships with current and future clients.
“I’m excited about the opportunities created by this merger for our teams, clients and the industry overall,” she said.
The company posted FAQs and more information at defisolutions.com/unity.
Before the merger announced, Alsbrooks Hanson participated in an episode of the Auto Remarketing Podcast to discuss how the auto-finance industry is continuing to leverage technology. That episode is available below.
