Target: J.D. Byrider
Price: Approx. $50 million in equity
Sponsor: Altamont Capital Partners
Seller: Founding family.
Financial Adviser: Seller: Stephens Inc.
Legal Adviser: Sponsor: Ropes & Gray
“We’re fired up,” Rogers told Buyouts in an interview before the deal was announced. “It’s a deal we’re real excited about.”
Indianapolis-based J.D. Byrider sells cars to people with poor credit from 127 franchised and company-owned dealerships in 29 states. Altamont Capital paid approximately $50 million in equity in the deal, which includes an undisclosed amount of financing. The investment comes out of Altamont Capital’s premier fund, which closed with $500 million in commitments late last year.
The company, which generates recurring revenue from royalty payments franchisees makes, has a good reputation with customers and a relatively complicated business model that’s hard for competitors to replicate. J.D. Byrider integrates several elements of the car purchasing process—such as buying and re-conditioning used cars, a retail operation, car maintenance and service, and financing—that are typically separate. “It’s complicated enough that it’s hard to run well, so not just anyone can do it,” Rogers said.
Stephens Inc., an investment bank out of Arkansas that advised J.D. Byrider and that had worked with Rogers a number of times while he was at Golden Gate, brought Altamont Capital the deal about six months ago. Rogers had previously looked at investments in retailers, franchisors and in the so-called “buy-here pay-here” auto niche that J.D. Byrider operates in. But this is the first time he’s closed a deal in the sector.
Steven E. Wedding, the company’s president of franchising, will become CEO, and the rest of J.D. Byrider’s executive team will stay in place. James F. DeVoe Jr., whose father founded the company in 1989, will remain on the board of directors and act as an adviser to the company.
Going forward, Rogers said Altamont Capital is looking seriously at six to eight other deals, and expects to close a handful in the next two to four months. At the end of the day, he expects the fund to take on anywhere from 12 to 16 companies with Altamont Capital’s first fund.
Bank of America led financing for the deal, which included asset-backed financing and mezzanine capital from Prospect Capital Corp. Rogers declined to discussed the financing in detail.