auto auctions

Apax Buys Preferred Stock of KAR

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Apax Partners has agreed to purchase $550 million of perpetual convertible preferred stock of publicly traded KAR Global.

KAR Global (NYSE: KAR) operates used vehicle auctions and provides vehicle remarketing services in the United States, Europe, Canada, Mexico, and the United Kingdom.

The company operates through two segments, ADESA Auctions which sells used vehicles through both online auctions and physical auction facilities, and AFC which provides floorplan financing to independent used vehicle dealers and sells vehicle service contracts. Customers of KAR include vehicle manufacturers, fleet companies, rental car companies, finance companies, commercial fleets, and dealers. KAR has a network of 74 whole car auction facilities across North America.

“KAR took early and decisive steps in response to COVID-19 to protect the safety of our employees and customers, preserve our capital position and keep our operations moving forward,” said Jim Hallett, chairman and CEO of KAR. “This transaction will help us continue to support our global customers and further accelerate our digital transformation. Apax is the right strategic partner for our company, employees and stockholders, and their investment reinforces the strength of our brands, market position, and long-term strategy for growth and expansion.”

In 2019, KAR had revenues of $2.8 billion and EBITDA of $508 million and sold nearly 3.8 million used vehicles valued at more than $40 billion. KAR was founded in 2006 and is headquartered in Carmel, Indiana.

The newly issued preferred stock has a 7% dividend which is paid in-kind for the first two years and later in cash or in-kind at KAR’s option. The initial conversion price of $17.75 per share is a 42% premium to KAR’s closing price of $12.52 per share on May 22, 2020.

“KAR is an internationally recognized leader in wholesale remarketing with a strong track record of innovation,” said Roy Mackenzie, a partner at Apax. “The company’s market-leading digital platforms and investments in data analytics uniquely position them to thrive in the new digital normal. We look forward to partnering with KAR’s progressive and entrepreneurial management team to transform their industry and drive long-term value for all stockholders.”

Apax has experience investing in the digital automotive marketing sector through earlier investments in Dealer.com (exited in 2013), Trader Corporation (exited in 2016), and Auto Trader Group (exited in 2016).

Apax invests in the technology and telecom; services; healthcare; and consumer sectors. The firm has offices in London, New York, São Paulo, Munich, Tel Aviv, Mumbai, Hong Kong, and Shanghai.

New York-based Periphas Capital participated with Apax on this transaction.  Periphas makes control and non-control investments in companies with $200 million to $2 billion in revenue that are active in the business services, industrial, technology and consumer sectors.

Goldman Sachs and J.P. Morgan were the financial advisors to KAR.

Private Equity Professional | May 28, 2020

Huron Continues Growth of Auction Biz

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XLerate Group, a portfolio company of Huron Capital, has acquired Columbus Fair Auto Auction. This is the eighth add-on completed by Huron since acquiring XLerate in May 2014.

Columbus Fair Auto Auction (CFAA) conducts financial institution, fleet/lease and dealer consignment sales each Wednesday. The auction operates an 11-lane arena, reconditioning facility, body shop and mechanical shop situated on approximately 154 acres near Columbus in Obetz, OH.

Huron Capital formed XLerate through the May 2014 acquisition of American Auto Auction Group (AAAG) from Baird Capital. Baird had conducted a consolidation in the auto auction industry to form Charleston, SC-based AAAG through the buys of six auction businesses over a four-year period. At the time of the sale to Huron, AAAG had operations in California, Wisconsin, South Carolina, Mississippi, Texas and Florida. Huron Capital rebranded AAAG as XLerate Group in November 2014.

With the buy of CFAA, Huron has now closed eight add-on acquisitions for XLerate. The seven earlier add-ons were Morton Auto Auction (January 2019); Southeastern Auto Auction (January 2019); Greater Kalamazoo Auto Auction (May 2015); Grand Rapids Auto Auction (May 2016); EPI-El Paso (June 2016); Lone Star Auto Auction (December 2016); and Corry Auto Dealers Exchange (March 2017).

Today, XLerate conducts auctions under 15 brands with fixed auction sites in California, Georgia, Ohio, Florida, Illinois, Michigan, Pennsylvania, South Carolina, Texas, and Wisconsin. The company is led by CEO Cam Hitchcock and is headquartered in Indianapolis.

CFAA was founded by Bill Jacobs in 1959 and the family has owned and operated the company ever since. Alexis Jacobs, the daughter of the founder, has led the business since 1982. Greg Levi is the company’s chief operating officer.

“Alexis has run the operation for over 30 years, earning esteem as an iconic independent auto auction with an impeccable reputation and consistently superior customer service,” said Mr. Hitchcock. “These attributes are a great fit with XLerate’s operating philosophy and track record of acquiring auto auctions with strong brand equity. We are honored that Alexis and Greg Levi have entrusted us to carry forward the Jacobs’ legacy at CFAA.”

“This acquisition bolsters XLerate’s presence in the critical Midwestern market and our capabilities to service large fleet/lease and financial institution customers,” added Mr. Hitchcock. “We are excited that Greg and his team will join XLerate’s highly talented management group. XLerate’s team will benefit from Greg’s deep experience in customer compliance and digitally-enabled sales platforms.”

“We are incredibly pleased to add CFAA’s strong family tradition and reputation surrounding service, dedicated staff and complementary sales platforms to our portfolio and are continually excited about its potential to grow and strengthen XLerate’s position as a leader in the auction industry,” said Matthew Lacki, a vice president at Huron Capital.

Huron Capital makes control and non-control investments in companies with revenues of $20 million to $200 million and EBITDAs of $5 million or more. Sectors of interest include business services, consumer goods and services, and specialty industrials. Founded in 1999, the Detroit-based firm has raised over $1.8 billion in capital through six private equity funds and invested in over 175 companies.

© 2019 Private Equity Professional | October 30, 2019

Huron’s Auto Auction Business Growing

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Huron Capital’s XLerate Group continues to grow with the recent buys of Morton Auto Auction (MAA) and Southeastern Auto Auction (SEAA).

Huron Capital formed XLerate through the acquisition in May 2014 of American Auto Auction Group (AAAG) from Baird Capital. Baird had conducted a consolidation in the auto auction industry to form Charleston, SC-based AAAG through the buys of six auction businesses over a four year period. At the time of the sale to Huron, AAAG had operations in California, Wisconsin, South Carolina, Mississippi, Texas and Florida. Huron Capital rebranded AAAG in November 2014 to XLerate Group.

With the buys of MAA and SEAA, Huron has now closed seven add-on acquisitions for XLerate. The five earlier add-ons were Greater Kalamazoo Auto Auction (May 2015), Grand Rapids Auto Auction (May 2016), EPI-El Paso (June 2016), Lone Star Auto Auction (December 2016), and Corry Auto Dealers Exchange (March 2017).

Today, XLerate facilitates transactions between buyers and sellers at its Internet-enabled physical sales locations in California, Wisconsin, South Carolina, Pennsylvania, Texas, Michigan, Illinois, Georgia and Florida. The company is led by CEO Cam Hitchcock and is headquartered in Indianapolis (www.xlerategroup.com).

“Adding MAA to the XLerate family helps solidify our Midwest footprint and adds another highly respected independent operator to our management team,” said Mr. Hitchcock. “We have stayed the course with XLerate’s long-term strategy to grow our business, footprint and service offerings by acquiring companies with high-quality independent sales and strong operating management.”

The buy of MAA from Steve and Ted Krupa – they acquired the business in 2006 from the co-founding Weihmeir family – is XLerate’s fifth Midwestern location. MAA serves many auto dealers in Illinois, Iowa, Wisconsin, Missouri and Indiana, as well as commercial consignors. The company is headquartered near Peoria in Morton, IL (www.mortonaa.com).

XLerate acquired SEAA from Wayne DeLoach, Tommy Childs, and Danny Williams who founded the company in 1987. Savannah, GA-based SEAA services dealers and consignors in Georgia, South Carolina and Florida and the company also conducts a weekly public sale (www.southeasternaa.com).

“We are excited to welcome SEAA to our extensive network of auction houses and to the growing XLerate family,” said Matthew Lacki, a vice president at Huron. “We believe our buy-and-build strategy and XLerate’s strong management team provide the company with the resources necessary to be an industry leader.”

Huron Capital is an operationally-focused private equity firm that makes control and non-control investments in companies with revenues of $20 million to $200 million and EBITDAs of $5 million or more. Sectors of interest include business services, consumer goods & services, and specialty industrials. Founded in 1999, Detroit-based Huron Capital has raised over $1.8 billion in capital through six private equity funds and invested in over 150 companies (www.huroncapital.com).

© 2019 Private Equity Professional | January 15, 2019

Trinity Hunt Builds Auction Biz

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America’s Auto Auction, a portfolio company of Trinity Hunt Partners since April 2015, has continued its expansion with the buy of Grand Rapids-based West Michigan Auto Auction.

On a weekly basis West Michigan Auto Auction (WMAA) consigns over 1,000 cars and has over 900 attending dealers at its sales. In addition to its auction services the company provides other services including mechanical and inspection; transportation; and reconditioning. WMAA has two locations in Grand Rapids and Parma, MI and was founded in 1996 (www.wmaa.net).

America’s Auto Auction specializes in wholesale auctions of automobiles on behalf of new car dealers, fleet lease businesses, repossession companies, and used car dealers.  The company, led by CEO Ben Lange, was founded in 2005 and is headquartered in Dallas (www.americasautoauction.com).

The buy of WMAA continues America’s Auto Auction’s nationwide growth and expands its market presence to 21 locations across the country. “This acquisition represents a compelling opportunity to add two high-quality auction locations to the America’s Auto Auction platform,” said Mr. Lange. Last month, America’s Auto Auction acquired Indianapolis-based Auction Broadcasting Company, a full service auto auction company offering transportation, full and partial reconditioning, telemarketing, in-house restaurants, auctioneers and ringman (bid spotters), and on-line bidding capability.

“We are excited to continue to build out America’s Auto Auction’s geographic footprint through this acquisition,” said Dan Dross, Managing Partner of Trinity Hunt. “The acquisition of West Michigan Auto Auction represents the continued execution of the value creation plan we developed in partnership with management when we invested in the company.”

Trinity Hunt invests in companies that have EBITDAs between $5 million and $25 million and enterprise values between $25 million and $150 million. Sectors of interest include B2B business services, niche manufacturing, industrial services, non-cyclical consumer and healthcare services. Trinity Hunt is based in Dallas (www.trinityhunt.com).

© 2017 Private Equity Professional | April 12, 2017

Trinity Hunt Buys Auction Broadcasting

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America’s Auto Auction, a wholesale automobile auction company and portfolio company of Trinity Hunt Partners since April 2015, has acquired Auction Broadcasting Company.

Auction Broadcasting Company (ABC) is a full service auto auction company offering transportation, full and partial reconditioning, telemarketing, in-house restaurants, auctioneers and ringman (bid spotters), and on-line bidding capability. The company is family-owned and was founded by Mike Hockett in 2000. ABC is headquartered in Indianapolis with auction facilities in Baton Rouge, LA; Birmingham, AL; Bowling Green, KT; Toledo, OH; Lancaster, PA; St. Louis, MO; and Virginia Beach, VA (www.auctionbroadcasting.com).

America’s Auto Auction (AAA) specializes in wholesale auctions of automobiles on behalf of new car dealers, fleet lease businesses, repossession companies, and used car dealers.  The company was founded in 2005 and is headquartered in Dallas. The company is led by CEO Ben Lange (www.americasautoauction.com).

According to AAA, the buy of ABC creates one of the largest privately-held wholesale auto auction platform in the US, increasing AAA’s market presence to 19 locations across the country. “This acquisition further establishes us as a leading automobile auction company in the country,” said Mr. Lange. “This consolidation will allow greater potential for dealers, fleet and lease, and institutional customers, and the culture of both companies is built around providing quality service to our customers and employees.”

“When we began our partnership with America’s Auto Auction, we set out to enhance the range of services provided and increase the company’s national footprint,” said Dan Dross, Managing Partner of Trinity Hunt. “This add-on acquisition is an ideal fit that achieves both objectives. We are excited to continue helping Ben Lange and his team grow organically, as well as through strategic acquisitions.”

Trinity Hunt invests in companies that have EBITDAs between $5 million and $25 million and enterprise values between $25 million and $150 million. Sectors of interest include B2B business services, niche manufacturing, industrial services, non-cyclical consumer and healthcare services. Trinity Hunt is based in Dallas (www.trinityhunt.com).

© 2017 Private Equity Professional | March 1, 2017

Baird Sells American Auto Auction Group to Huron

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Baird Capital’s US Private Equity group has completed the sale of its portfolio company American Auto Auction Group (AAAG) to Huron Capital Partners.

“When we created American Auto, our goal was to build a national full-service, dealer-centric re-marketing platform by pulling together a group of strong independent auctions, and layering on new services,” said Randy Mehl, Partner with Baird Capital’s Private Equity group. “Over the last few years, we worked with AAAG’s management team to expand the company’s footprint through several acquisitions in targeted regions, while adding financing and technology capabilities to those businesses.”

Baird Capital established American Auto Auction Group in 2010 to execute an acquisition platform strategy in the whole car auction market. During the course of ownership, AAAG acquired six auction businesses, and the number of cars run through auction annually has grown from approximately 55,000 to more than 215,000. The company’s acquisitions include Auctions in Motion (Westlake Village, CA), Badger State (Fond Du Lac, WI), Charleston Auto Auction (Moncks Corner, SC), Mid-South Auto Auction (Pearl, MS), Texas Lone Star Auto Auction (Carrollton, TX) and Your Auction (Tampa, FL). The company is headquartered in Charleston, SC (www.americanaag.com).

“Baird’s credibility as a financial partner, commitment to the strategy, and extensive network of contacts were important drivers for our expansion, and we thank them for all of the contributions they have made,” said Darris McClure, AAAG President.

Baird Capital, the direct private investment arm of Robert W. Baird & Co., invests in lower middle-market companies in the manufactured products, healthcare and business services sectors. The firm invests from $15 million to $35 million in companies with enterprise values of $25 million to $125 million and EBITDAs greater than $5 million. Baird Capital was founded in 1989 and is based in Chicago (www.bairdcapital.com).

In acquiring AAAG, Huron partnered with industry veteran Cam Hitchcock, who will join AAAG as CEO. Mr. Hitchcock is an experienced industry veteran having recently served as the Executive Chairman of Primeritus Financial Services and Partner at Elysian Advisors. He has also served on the boards of two private equity-backed auction remarketing companies. Earlier, he was President and CEO-Dealer Services Group and Corporate CFO of ADESA, an automotive auction and remarketing services company.

“I am honored and excited to partner with Huron and the AAAG senior management team. We have closely watched the dealer sale market segment over the last 24 months and believe that there are significant opportunities to better serve dealer consignors in many US markets. Our objective is to provide AAAG’s customers with highly responsive, tailored service offerings across multiple geographies. Huron has committed significant capital to enhance and scale this platform, and we look forward to deploying it,” said Mr. Hitchcock.

“Huron is very excited to partner with the AAAG family of auctions, their employees, and customers to continue building what we believe is the preeminent national auction group focused primarily on dealer to dealer sales. In the years to come, we intend to make a difference in the lives of people by investing in our team and the communities we serve,” said Peter Mogk, Senior Partner at Huron.  “We know from experience that value-added customer service begins with equipping our people with the best facilities, training and career opportunities. We believe we have ample resources dedicated to build, grow and acquire auctions that embrace technology and ever-changing customer needs.”

Huron Capital Partners invests up to $70 million per transaction in middle market companies that have revenues up to $200 million and EBITDAs of $5 million or more. Sectors of interest include education & training, healthcare, specialty chemicals, specialty packaging, consumer products, home decor, business services, industrial manufacturing, food & beverage, and marketing services. The firm was founded in 1999 and currently manages over $1.1 billion in committed equity through four private equity funds. Huron Capital Partners has offices in Detroit and Toronto (www.huroncapital.com).

2014 PEPD • Private Equity’s Leading News Magazine • 5-27-14