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Rumors have been flying around the car biz since AutoCon in early September and all Reynolds employees from before the Brockman acquisition began receiving "cash out" offers to retire the Reynolds and Reynolds pension fund liability... Who will end up owning the second largest DMS provider in the auto industry?
NEW YORK (Reuters) - October 29, 2012 - Reynolds and Reynolds, which provides business management software for auto dealers in North America and Europe, is exploring a sale to private equity that could fetch around $5 billion, several sources familiar with the matter said."
Reuters goes on to say:
"The privately held company has hired technology-focused investment bank Qatalyst Partners to manage the process and is in talks with a few major private equity firms about a leveraged buyout, the sources said on Monday."
Similar to Seller Assisted Financing, Reuters reports:
"Deutsche Bank <DBKGn.DE> is also helping Reynolds and Reynolds with a potential sale and has offered seller financing to potential buyers, the sources added."
Reuters reports on record earnings levels by Reynolds:
"The company has over $500 million in annual earnings before interest, tax, depreciation and amortization (EBITDA) and could be valued at around 10 times EBITDA, two of the sources said."
With an auction style format and heavyweight sales representation, the sale of Reynolds and Reynolds may set new standards, as reported by Reuters:
"The sale process involves the largest private equity investors in the technology space, including KKR & Co LP <KKR.N>, the sources said. The auction is early in the second round with management meetings scheduled to take place over the next few weeks, the sources said."
Interesting disclaimer within the Reuters news report:
"All sources asked not to be identified because the process is not public. Representatives for Reynolds and Reynolds and Deutsche Bank declined to comment. KKR and Qatalyst Partners did not immediately respond to requests for comment."
About the Reynolds and Reynolds Company according to the Reuters News Report:
"Dayton, Ohio-based Reynolds sells software tools that allow car dealers to run their operations, including providing car dealer websites, digital advertising and marketing services, as well as data archiving.
In 2006, the company was acquired by Universal Computer Systems (UCS) for $2.8 billion. The merged company retained the Reynolds name and is currently headed by Chairman and Chief Executive Bob Brockman, who used to run UCS.
Brockman's $2.8 billion buyout was funded primarily by a group of investors that included Goldman Sachs Capital Partners, the private equity arm of Goldman Sachs Group <GS.N>, and Vista Equity Partners."
The Reuters Reporting referenced in this post was written by Nadia Damouni, Soyoung Kim and Greg Roumeliotis in New York; with editing by Bernard Orr
Online source: www.reuters.com
So... What have you heard? Who is going to buy The Reynolds and Reynolds Company?
My money's on AutoTrader.
As opposed to Cox, or do you refer to ATC as being inclusive of Cox?
Do you think Naked Lime is in the mix or being partitioned out?
I believe a ReyRey sale would include Naked Lime because of the Rey Sales Channel dependency and close integration of RWS sites with the Rey EAI server which routes all relevant data changes from the ERA Apache server in close to real time.
I'm not so sure about this Ralph. I can see them spinning off Naked Lime or at least integrating it with VinSolutions somehow. Vin has superior integration between their CRM and Website. Add to that, total integration with the DMS... there's no end to what they could forseeably do.
I'm also thinking about Big Data that AutoTrader is focusing on and the ability to track customers from beginning to end in the buying process and integrating that into the CRM processes. I think there's real potential here for some mind-bending marketing solutions.
David, I would not see an ATC/Cox acquisition of ReyRey as an attempt to kill competition as much as it would be to create a competitive and compelling dealer offering built around a unique value proposition not available from any other bundle of supplier products, services and solutions.
Ralph, I agree. I would personally see it as a positive.
Just because an "umbrella" company owns many different assets doesn't always guarantee better integration or performance. Even thought we have Autonation, Sonic, etc utomotive business is full of "small" very entrepenurial operators that work very well with smaller companies than these giants in pursue of their vision of what the automotive business is. When you work with the giants you have to follow their vision.
Two years ago John Holt spoke at DSES just after Chip Perry and while Perry commented on how great their one stop shop was going to be Hold changed his probably prepared speech and spent a few minuted talking about the imposibility of being number one at everything and how dealers will look for what best on every piece of the equation.
Interesting and relevant for me. I wouldn't be surprised if Keith is right. AutoTrader would have the missing piece to a complete solution.
Cox/Autotrader makes sense. When they went on their buying spree I felt at some point they would go after a DMS.
Joey, you are not the only one who has posed such a scenario, and with the all-star sales and financing team that Brockman has assembled, the buyer will need to be able to show that they can handle such a sizable deal, which Cox and AutoTrader are in a unique position to qualify for...