CDK, which already counts large dealership groups such as AutoNation Inc. among its clients, says the acquisition will expand its reach among smaller dealerships. Auto/Mate served a "really specific market" of dealers with one or two rooftops, said Ron Frey, CDK's chief strategy officer.
Auto/Mate, a privately held company in Albany, N.Y., has more than 1,000 new-car dealerships using its DMS products. In contrast, CDK, of Chicago, and Reynolds, of Dayton, Ohio, control more than 70 percent of the DMS market.
When the deal is finalized, CDK says, Auto/Mate's DMS initially will be a third option in its lineup. CDK currently offers the DASH platform, which is touted as its low-cost DMS, and its core DRIVE product.
Over time, CDK will migrate DASH customers to the Auto/Mate system "in a way that is convenient for those customers," MacDonald said.
MacDonald said there are no plans to rebrand Auto/Mate. The Auto/Mate brand, MacDonald said, is "well recognized and respected in the marketplace," so CDK will keep the name.
The CDK and Auto/Mate teams have been working closely on planning the integration of the companies. Auto/Mate CEO Mike Esposito couldn't be reached for comment.
"Auto/Mate put itself up for sale a few months ago and went through a traditional sales process," MacDonald said.
"We think that Auto/Mate gives us a product to service smaller-footprint dealers and bring our combination of layered apps, websites and other digital assets to smaller-footprint dealers that we think are often underserved."
A CDK executive attended the deal's unveiling at Auto/Mate's office last week to talk to staffers to alleviate concerns, such as how benefits plans will be affected.
Asked if Auto/Mate's team will have to move to Chicago, MacDonald said there were no plans "to make any material changes to the Albany office." But there will be opportunities for some to head to the Windy City.
The transaction, expected to close this summer, has been approved by each company's board of directors but is subject to customary closing requirements and regulatory approvals. Terms were undisclosed.
MacDonald said CDK has a $10 billion market cap, which enables it to make big investments in research and development. He said CDK can bring new tools and information technology capabilities to Auto/Mate, whose $20 million of revenue doesn't allow it to make those kind of investments.
"There's a lot of competition in that part of the market, there's a lot of choice," MacDonald said.
"We think by bringing our capabilities as a bigger company making bigger investments, we think we can bring investments to the Auto/Mate product [and] bring in other products that can work with it and integrate with it to deliver more value to the dealers that use Auto/Mate."