That full-platform solution was a benefit DealerSocket and Auto/Mate deal announcement.
That plan, however, quickly came to a halt. On Jan. 14, Perry sued DealerSocket, the company he started with Jonathan Ord nearly two decades ago in a garage, and the private equity company the pair brought in as an investor. Perry sought to block the transaction on the grounds that he was frozen out of the process.
Perry and Ord declined interviews through their lawyer, Sanford Michelman, who told Automotive News in January that his clients, both of whom are DealerSocket board members, weren't necessarily opposed to a deal but hadn't been given the information they needed to independently evaluate it.
Perry's lawsuit accused 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.
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 cited a plunge in DealerSocket's equity valuation last year from $499 million in June to about $28 million by September. That prompted a judge in the Delaware Court of Chancery, where the case was filed, to ask in a Jan. 16 hearing whether the lower figure was a typographical error.
Vista lawyer Matthew Solum told Automotive News a valuation of DealerSocket of $28 million was not a typo, but rather an assessment by Valuation Research Corp., which he described as a third-party company. It was based on the outlook for the company at the time, he said.
Vista plans to invest up to $263 million in equity as part of the Auto/Mate transaction, according to court filings, and it will allow all shareholders to participate. One dispute in the case concerned how much of a collective stake DealerSocket's minority shareholders would hold in the company going forward.
According to court documents, DealerSocket denied Perry's 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."
DealerSocket attorney David Ross stressed the urgency of finalizing the Auto/Mate acquisition before the NADA Show in a Jan. 30 hearing. The show, he said, is "one of the most important trade shows and a unique opportunity to launch the combined companies."
About a week later, on Feb. 7, Ross notified the judge in the case that the parties were working on a settlement and asked him to cancel a Feb. 11 hearing on whether to issue an injunction preventing the deal from proceeding while litigation was pending. Vice Chancellor J. Travis Laster lifted the temporary restraining order on Feb. 10, and the companies said they had completed the deal hours later.
Lawyers for Perry, DealerSocket and Vista did not respond to messages seeking comment about how the deal came together. Settlement details have not been publicly released.