January 2, 2017 — M&A activity among automotive retail vendors for the year ended quietly with only four deals completed in the fourth quarter. Nevertheless, the 31 acquisitions and investments in 2016 surpassed the 30 in 2015.
The four deals in the fourth quarter include (more information about the following deals are included in the 2106 Deal Review section below):
- JMI Equity’s investments in Axonify and Automotive Mastermind
- Internet Brand’s acquisition of Autobytel’s special finance leads solution
- RouteOne’s acquisition of MaximTrak.
Since January 2014, there have been 80 acquisitions, IPOs or significant investments accounting for approximately more than $46 billion in capital changing hands among companies in the auto retail vendor space.
To read TBR’s M&A analysis from previous years:
To read all of TBR’s news and analysis on vendor deals:
WHAT WE GOT RIGHT — AND DIDN’T GET RIGHT ABOUT 2016
Several of the predictions we made on January 14, 216 in our 2015 Report panned out, although, we did miss on a few projections.
- We predicted the industry would see fewer deals in 2016. With 31 deals, there actually was one more than in 2015. But the fourth quarter turned out to be quiet with only four deals completed.
- TBR predicted one or more of the privately held website firms would be picked up. That didn’t happen in 2016, although, we know there have been discussions. Possibly this year..
- TBR predicted the Hearst Corp., the parent company of BlackBook and Jumpstart Media, would be a buyer. But there were no deals in 2016. Instead, the company reorganized its automotive properties combining BlackBook Online with Jumpstart Media to form Hearst Autos, in May. The new entity likely will be a buyer this year.
- CarGurus didn’t make any acquisitions despite our predictions, but continues to grow. It’s also a target for acquisition, but don’t be surprised if it pulls off an IPO in the next 12 to 24 months.
- We also predicted Cox Automotive would continue to be a buyer in 2016 — it was, but only in the international space. That strategy will likely continue into 2017 as the company continues to deal with what has been a challenging integration with DealerTrack. Meanwhile, it will be interesting to see if Cox unloads any of its automotive-related solutions this year.
- Not quite a miss yet, but we did predict CDK Global likely would be sold either in the fourth quarter of 2016 or the first quarter of 2017. All of the Wall Street chatter about potential acquisitions has been silent for the last several months. CDK executives late in 2016 indicated the company will be a buyer, but a sale likely still in its future — and probably will happen this year. Look for either a private equity firm (or a group of firms) or a larger player such as a Salesforce to make a move.
What TBR got right:
- The sale of J.D. Power and Associates — we called that one right, along with getting into the neighborhood on the price. We said $800 million to $1 billion — it ended up being sold to XIO Group for $1.1 billion.
- We predicted F&I would be a hot segment. There were five deals in that sector last year — that qualifies as hot, right?
- We predicted the sale of AutoTrader Canada — although, we did mention Cox as being a potential buyer, the company ended being acquired by PE firm Toma Bravo.
- DealerRater was another company we predicted would be sold in 2016. TEGNA’s Cars.com was the buyer toward the middle of the year.
- Talking about TEGNA, we speculated it would do something by the middle of the year, although, we envisioned it would be something more transformative than DealerRater. But TEGNA announced its big deal last fall — spinning Cars.com off into a separate public company in a move scheduled to be completed by the end of March. It’s still possible an outside firm could acquire Cars.com before the spinoff. (We did say in March 2015 that TEGNA would end up spinning Cars.com off in either a sale or an IPO).
- Reynolds and Reynolds’ acquisition strategy was another call we got right. We said the company would continue its strategy of smaller, tuck-in type deals. It made five such deals in 2016 and will probably make more in 2017.
We’ll keep the outlook to a high level view for now, and will provide a more detailed perspective once we get through our interviews at the National Automobile Dealers Association convention in three weeks. Read More
About The Banks Report:
Designed for top automotive executives, dealers, industry analysts and investors who want to cut through the noise and get an accurate picture of what’s going on in the Automotive Retail space, the Banks Report is an online source that provides subscribers with daily insight into the top news stories of the day.
The Banks Report was created by Cliff Banks, an award-winning journalist with more than 20 years in the automotive retail space. As an editor of two automotive-related media companies, he built a vast network of sources ranging from CEOs to service technicians at the dealership. There’s no one better at connecting the dots and putting the news into perspective.
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