Southfield Capital has completed the sale of Spectrum Automotive Holdings (DBA Vanguard Dealer Services) to Cornell Capital.
Vanguard Dealer Services is an agent and administrator of finance and insurance (F&I) products and services to franchised automobile dealers. The company offers a portfolio of proprietary and third-party auto extended warranty (vehicle service contracts) and ancillary products such as tire protection, key replacement, dent repair and pre-paid maintenance.
Vanguard also offers other financial and insurance consulting services to dealers such as training, compensation plan development, reinsurance, incentive management, sales strategy, compliance review, and staffing. Vanguard has more than 1,400 dealer, administrator and original equipment manufacturer customers. The company was founded in 1999 and is one of the largest independent F&I agencies in the United States. Vanguard is headquartered just west of New York City in Fairfield, NJ (www.vanguarddealerservices.com).
Southfield acquired Spectrum Automotive in August 2015 in partnership with the company’s management team. Over the four-year term of the investment, Spectrum quadrupled its earnings by expanding its sales platform, closing five add-on acquisitions and broadening its product line. According to Southfield, the sale of Vanguard was a “highly successful” transaction.
“Southfield was an outstanding partner,” said Jim Polley, Spectrum Automotive’s CEO. “Everything they said they would do they did and then some. They provided great support as well as great mentorship. They are gentlemen to work with regardless of the situation. They are very open-minded, fair and always looking for ways to grow. I would not hesitate to be partners with them again, and I have a great deal of gratitude for all the wonderful things that came of our time and relationship together.”
“Working with Spectrum Automotive’s senior leadership over the last few years to strengthen the value proposition and expand the service offering to our clients was a great experience,” said Andy Cook, a partner with Southfield. “We are thrilled with the growth achieved in a short period of time and the team’s ability to create a truly unique asset in the F&I industry. We wish everyone the best of luck in the next chapter.”
Southfield Capital makes control investments in companies that are active in the outsourced business services sector and have EBITDA of $4 million to $12 million. In August 2017, the firm held a final close of Southfield Capital II LP with approximately $200 million in capital commitments. The close was at the fund’s hard cap and exceeded its original target of $175 million. Southfield Capital was founded in 2005 and is headquartered in Greenwich, CT.
Cornell Capital was founded in 2013 by Henry Cornell, the former Vice Chairman of Goldman Sachs’ Merchant Banking Division, to invest in companies in the consumer, energy, financial and industrial sectors.
“Spectrum’s strong relationships and differentiated F&I product portfolio have established the company as a clear market leader,” said Mr. Cornell. “With impressive growth, a diversified and resilient business model and an exceptionally talented management team, Spectrum embodies the type of business we strive to partner with at Cornell Capital. As the F&I sector continues to grow, we look forward to working with Jim and the team to build on Spectrum’s momentum and capitalize on a range of compelling growth opportunities.”
Cornell has experience in the insurance sector having acquired Talcott Resolution, the US life insurance and annuity business of The Hartford Financial Services Group. Cornell led a $1.7 billion equity consortium in financing the carve-out, which was completed in May 2018.
“Cornell Capital’s operational experience and intricate knowledge of our business and the opportunities present in the market make them the ideal partner for Spectrum’s next stage of growth as we continue to expand what we can deliver to our clients, employees and partners,” added Mr. Polley.
In June 2018, Cornell Capital held a final closing of its inaugural private equity fund, Cornell Capital Partners LP, with total capital commitments of $1.3 billion. The firm has offices in New York and Hong Kong.
Sandler O’Neill & Partners was the financial advisor to Spectrum Automotive and PwC provided transaction advisory services. Finn Dixon & Herling provided legal services.
© 2019 Private Equity Professional | October 11, 2019
