Since DealerSocket was founded nearly 19 years ago by co-founders Jonathan Ord and Brad Perry in Brad’s garage in California, their vision was to offer auto dealers innovative software with a deep focus on customer service. They began by creating the industry’s first-ever hosted CRM solution for dealerships. After partnering with Vista Equity Partners, they acquired four companies to expand their offering, and by the end of 2015, DealerSocket was nearly able to offer the market a full platform solution, but was still missing a key piece, a franchise DMS solution.
Our founders’ vision from several years ago of an all-in-one platform is today almost a reality. Earlier this month, I shared with you that DealerSocket signed an agreement to acquire Auto/Mate, a DMS that serves more than 1,500 franchise dealerships. Auto/Mate has in recent years become a leading franchise DMS provider, winning more than 82% of their customers from the industry’s two largest DMS competitors, and enjoying more than 98% retention year after year.
Since early 2018, when I first spent time with Auto/Mate’s leaders, I realized that our companies share similar core values, and we both have a dedicated team who care deeply about our dealership customers, many of whom come from families of dealers and have spent years of their career working in dealerships. I truly believe the combination of our two great companies offers dealers a much-needed alternative, a new choice for a full platform solution in our industry, dedicated to serving car people by car people.
Challenges you may have heard about or seen in the media about this transaction are disagreements regarding the valuation and economic terms of this transaction among our founders and other board members. There is no disagreement across our board about the strategic benefits the transaction will have for DealerSocket, Auto/Mate, and our dealers.
We have been working on the acquisition of Auto/Mate for quite some time. Throughout this period, we held very comprehensive and deliberate discussions with our board, including several board meetings and volumes of emails and calls discussing and iterating on financials and the decision to execute on this transaction. The entire process has been handled with integrity, openness, and thoroughness. We discussed and agreed on the strategic value of our combined companies, and we reviewed detailed financials, which were shared amongst all of our board members in connection with this deal. Ultimately, our board agrees on the strategic value of combining DealerSocket with Auto/Mate, and all of our board members, including myself, unanimously voted to approve the deal, except our two founders, due to economic terms related to it.
I am disappointed that these legal filings are causing a delay in completing this acquisition and ultimately delaying our ability to offer our dealers the strategic benefits of a combined offering. I look forward to completing the next steps and welcoming the Auto/Mate family to DealerSocket soon. I believe we will look back many years from now and realize that the combination of DealerSocket and Auto/Mate was one of the most impactful, game-changing decisions for our dealers and the automotive software industry.
I look forward to sharing great news of a completed acquisition with you soon.
Sejal PietrzakPresident & CEO