Reynolds and Reynolds explores $5 billion sale to private equity, report says
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NEW YORK (Reuters) -- Reynolds and Reynolds, a leading provider of 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 told Reuters.
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.
Deutsche Bank is also helping Reynolds and Reynolds with a potential sale and has offered seller financing to potential buyers, the sources added.
A sale would mark the second change of ownership for Reynolds in six years. In 2006, the company was acquired by Universal Computer Systems for $2.8 billion. The merged company retained the Reynolds name and is currently headed by Chairman and CEO 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, and Vista Equity Partners.
Ron Lamb, Reynolds' president, assumed the post in 2010 after two decades at the company.
Twin pillars
Reynolds and ADP Dealer Services are the dominant providers of dealer operating software in the United States. Each serves about 40 percent of the 18,000 or so dealerships in the United States.
Reynolds' software helps dealers manage everything from store accounting to payroll and inventory to customer retention and digital marketing.
The company has more than $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.
The sale process involves the largest private equity investors in the technology space, including KKR & Co. LP, 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.
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.
Dayton, Ohio-based Reynolds sells software tools that allow car dealers to run their operations, including providing car dealer web sites, digital advertising and marketing services, as well as data archiving.
The company was founded in 1866 by Lucius Reynolds and his brother-in-law as a printer of standardized business forms. It started to serve automotive retailers as major clients in the 1920s.
David Barkholz contributed to this report.
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