Automotive Marketing Professional Community for Car Dealers, OEM and Suppliers
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?
Ralph, I am very involved with Naked Lime and I agree. I have never met a more responsive team of people than those at Naked Lime. They not only take their jobs seriously, they do so creatively.
Naked Lime is my favorite of all of the online services providers.
Tom (and Keith) - Most of the people that I respected and admired the most at the time I left Reynolds and Reynolds (and who are still with the company), are now on the Naked Lime team... I am a huge fan of Nicole Case, who leads the Naked Lime organization. I have watched the emergence, naming and organizational structure that launched Naked Lime with great interest and admiration. They have really created dramatic improvements and milestone level accomplishments since Nicole took over the shambles that remained of Reynolds Web Solutions after Stuart Lloyd, Ray Myers and Tim Clay left to form Clickmotive. Nicole Case should be richly rewarded if they do sell Naked Lime because what she has accomplished in building that organization is nothing short of amazing... Despite the fact that the company is named after a nightclub in New York with a VERY nasty reputation! Which is actually when I truly realized that this business unit was going to be independent of the Reynolds DMS mother ship and the UCS wonks out of Houston.
OK... Here is an idea that a little birdie shared with me on Tuesday, and which I am now going to run with based on my own insight and imagination:
Imagine if the upper management team at Reynolds and Reynolds teamed up to approach all these various sources of private equity, financing and credit assistance to make a case for a management led "employee buyout" of the Reynolds and Reynolds Company of Dayton, Ohio.
OK, maybe as a former loyal and fiercely proud Reynolds Associate, this is too much like one of those pipe dreams that employees often come up with, but it has happened before and consider this: With an ego and sense of self importance the size of King Kong on steroids, Ron Lamb is most likely NOT going to want to see his company purchased by outsiders who may not share his own grandiose perception of his leadership value as President of Reynolds and Reynolds...
Besides, Ron Lamb attended one of those East Coast Ivy League universities known for its skull and dagger secret societies and connections that benefit its student graduates for their entire lifetime. I can definitely envision Ron Lamb putting some sort of deal together for a management led buyout that leverages all the financial resources that have been lined up as reported by Reuters.
Either that, or... Aaron Bickart buys Reynolds and puts it on his Unlimited Credit Line Amex card and rides into Dayton to blow Ron Lamb's ass right out of his cushy desk chair on Mahogany Row in Research Park!
A scenario that includes a company, such as Dominion, which has already established a broad range of products that have a significant footprint within the dealer network would make for a compelling business case to the decision makers for the financing resources arranged to date.