Auto/Mate officially has been acquired.
DealerSocket, a dealership software company that specializes in customer relationship management solutions, on Monday said it finalized its purchase of dealership management system provider Auto/Mate, of Albany, N.Y.
The combined company will cover more than 9,000 dealership customers and expand the array of software products it offers to dealerships, including DMS and CRM platforms that are core to a dealership’s operations.
The deal’s closing came hours after a judge in a Delaware court lifted a temporary restraining order that had barred DealerSocket from completing the Auto/Mate transaction as part of an agreement to settle a lawsuit brought by DealerSocket co-founder Brad Perry.
Perry sued in January to block the deal, accusing private equity company Vista Equity Partners, DealerSocket and several board members of deliberately withholding information about the Auto/Mate acquisition as part of a larger effort to dilute the co-founders' minority stake.
Vista bought a stake in DealerSocket in 2014 and is now majority owner.
"The combination of DealerSocket and Auto/Mate gives dealers a long-awaited and much-needed alternative for an integrated, connected platform of mission-critical software for dealerships,” DealerSocket CEO Sejal Pietrzak said in a statement.
“Auto/Mate has built a reputation as a transformative, fast-growing DMS with an unmatched commitment to customer service. As we look at our combined company, there are tremendous opportunities for innovation, while we maintain our strong focus on support."
The companies said in a joint news release Monday that the merger will add Auto/Mate’s DMS product to DealerSocket’s software tools, including the CRM, inventory management, digital retailing, equity mining, digital marketing and websites.
DealerSocket, based in Irving, Texas, also has offered a DMS system for independent dealers, and integrating Auto/Mate’s system will help it reach franchised dealerships.
DealerSocket said it plans to “invest significantly in seamless integrations with Auto/Mate,” including in artificial intelligence and machine learning and a more user-friendly experience.
“Auto/Mate is thrilled to become part of DealerSocket,” Auto/Mate CEO Mike Esposito said in a news release. “We have a shared mission of serving dealers with great software and customer service, and that makes this a winning combination for our customers, partners, and team members.”
Perry agreed to settle a lawsuit he brought against the company he helped start nearly 20 years ago and the private equity company brought in as an investor, according to a court filing signed Monday by a judge in the case.
The settlement cleared the way for DealerSocket to proceed with its acquisition of Auto/Mate. The acquisition, announced in January, had temporarily been held up in court.
Vice Chancellor J. Travis Laster on Monday signed off on an order to lift a temporary restraining order blocking the deal, according to a DealerSocket lawyer and confirmed by the Delaware Court of Chancery.
David Ross, a lawyer for DealerSocket, filed a letter dated Friday, Feb. 7, in the court, noting that “the parties have reached an agreement to resolve their disputes.” It requested that Laster cancel a hearing that had been scheduled for Tuesday, Feb. 11, on whether to grant an injunction as the litigation proceeded, according to a copy of the letter Ross provided to Automotive News.
“The parties are in the process of fully documenting their settlement and will update the Court as that proceeds,” the letter reads. “All parties, including Plaintiff, have agreed to the terms of the stipulation and proposed order, and Plaintiff has authorized the filing of this letter.”
As of Monday, no details of the settlement were publicly available.
Perry’s co-founder, Jonathan Ord, filed a separate lawsuit in December demanding to inspect DealerSocket’s books. Both co-founders raised questions about fluctuating valuations of DealerSocket.
Perry’s complaint cites a plunge in DealerSocket’s equity valuation last year from $499 million in June to about $28 million by September. That prompted Laster, the judge, to ask in a Jan. 16 hearing whether the lower figure was a typo.
Perry and Ord previously declined interviews through their lawyer, Sanford Michelman. Michelman recently told Automotive News that his clients weren’t necessarily opposed to a deal but hadn’t been given the information they needed to independently evaluate it. Michelman confirmed Monday that Perry’s case was settled but was not immediately available for additional comment.
According to court documents filed in the Perry case, DealerSocket denied the claims as “utter fiction,” adding that “this case is about two individuals seeking to gain leverage in a misguided attempt to buy back the company they sold to Vista.”
Launching at NADA
The lawsuit’s resolution appeared to satisfy Perry, who released a statement as part of the news release announcing the closing of the deal.
“After years in the making, it is terrific to finally see the combination of these two companies that are so focused on the needs of the dealer,” Perry’s statement said.
In January, DealerSocket announced plans to buy Auto/Mate for an undisclosed price, touting the combined company's scale and ability to offer dealerships a "full platform solution," according to a news release at the time. The deal, estimated in a court transcript to be worth roughly $200 million, had been in the works since at least August 2018, according to DealerSocket's court filings.
Both companies said they plan to kick off the merger at the NADA Show in Las Vegas, starting this week.