DETROIT -- Cox Automotive President Sandy Schwartz, in a wide-ranging interview, offered this peek at Cox Enterprises' $4.5 billion purchase of Dealertrack in 2015.
At a strategic-planning session of Cox Enterprises' top executives, Alex Taylor, now 42, the founding family's heir apparent to run the $18.1 billion company, gave a presentation on how to triple the size of the company over the next 20 years.
Afterward, Taylor and CEO John Dyer asked what else the automotive division should be doing -- or buying. Dale Pollak, founder of vAuto, which Cox bought in 2010, suggested buying Dealertrack.
Keith Jezek, then president of Cox Automotive's software solutions, enthusiastically agreed, saying, "We'd have all the pieces," Schwartz recalls.
Schwartz was more cautious. He knew it would be very expensive and he was still working on combining Autotrader and Manheim into Cox Automotive. But with management's encouragement, he began due diligence and contacted Mark O'Neil, CEO of the publicly traded Dealertrack. O'Neil said he didn't know whether the board would approve any sale, but talks continued.
The process went much faster than it would have at a publicly traded company, Schwartz said. Eventually, a meeting of six senior Cox executives agreed that it would be a good acquisition, if they could do it at the right price.
Chairman Jim Kennedy, 68, grandson of Cox's founder, asked every executive there individually to look him in the eye and confirm agreement with the decision. After each executive said yes, Kennedy then gave Schwartz two orders: "1. Don't overpay, and 2. Don't lose the deal."
Schwartz took that to mean: Buy the company for a price that's fair -- for us and for them.
As the meeting wrapped up, Kennedy pulled Schwartz aside and asked, "You are going to be here, right?" to see the merger through.
Schwartz assured Kennedy that he would. But he later sought help with the integration, asking O'Neil to become Cox Automotive's COO with responsibility for integrating the company's parts. O'Neil, Schwartz reasoned, has a proven track record of integrating technology companies successfully.