A year ago, Rick Ford was COO of another dealer's group. Today, with the backing of private equity investors, he's leading a new 13-store dealership group poised to nearly double in size.
RFJ Auto Partners Inc. in Plano, Texas, wants to become one of the top 25 dealership groups in the U.S., said Ford, a 35-year dealership veteran and president of the group. In 2014, it acquired 13 dealerships and one auto auction in Texas and Alabama. It has another 11 store purchases under contract and scheduled to close during the first quarter, Ford said, with other potential deals in the pipeline.
"We're not anywhere close to done," Ford, 51, told Automotive News.
He formed RFJ in February 2014 after hunting among private equity firms and family offices for a financial backer and finally selecting Jordan Co., a New York private equity firm.
Jordan has invested more than $50 million, Ford said, adding the firm has committed to a nine-digit figure. That implies an eventual investment of $100 million or more, though Ford declined to specify. He said there is no defined time limit on the investment.
The recession of 2008-09 triggered Ford's pursuit. It was the third or fourth significant downturn he had gone through, he said.
"Having watched it bounce back, I thought, one, there'd be an opportunity to acquire dealerships at reasonable prices," Ford said.
But even "reasonable prices" are high these days. Those capital requirements, given real estate and facility costs, continue to rise, making it difficult to grow a large group without being a public company or a very wealthy person, he said. But he saw potential between the industry's traditional mom-and-pop stores and big public groups.
"I thought there existed an opportunity between those two to grow a really substantial company," Ford said.
Because auto retail proved its resilience during the recession, bouncing back fairly quickly with strong returns, Ford figured such a play would make sense to an outside investor group.
After working in dealerships as a teenage "oil-change boy," Ford started selling used cars at 18 at an Oldsmobile store and worked his way up. He's been an owner and has worked as a platform manager at both AutoNation Inc. and Sonic Automotive Inc. He was a partner and COO at Randall Reed's World Class Automotive Group just before starting RFJ.
RFJ is targeting primarily what it calls Tier 2 cities in the Sun Belt with growing populations and where the company's dealership would be the only one selling a particular brand in the area. Stores could be on the fringes of major metro areas -- several of the group's recent acquisitions are just outside Dallas in cities such as Greenville and Bonham -- or in more rural locations or midsize cities, Ford said.
RFJ's dealerships so far sell Ford, General Motors and Chrysler brands, plus Hyundai, Kia and Fiat. Some major Japanese-brand stores are under contract, he said.
His ownership in the RFJ stores is "significant," he said, but he declined to share details. Projected annual revenue in 2015 for the existing stores is $500 million-plus, Ford said, moving to more than $1 billion annually when the stores under contract are folded in.
Though manufacturers' reception to outside investors has been "the most difficult part of our growth strategy," RFJ has not lost any deals thus far, Ford said. He called his relationships with sellers, some of whom he'd known for many years, a key reason.
"Even those I didn't know prior, I make sure to develop a relationship," he said. That includes giving them a realistic sense of how long it will take to close the deal, which is often longer than it would be with a traditional buyer. All general managers at the purchased stores have stayed on, he said. Ford is the dealer principal for most of the stores.
Dealership pricing is high now, but "we've been very disciplined about our acquisitions and not overpaying," Ford said. "When it does start to come back down, that's when we'll be even more aggressive with our acquisitions."