HGGC inks AutoAlert deal, platform add-on on same day

  • AutoAlert aims at helping car dealers boost sales
  • HGGC adds Polaris Library Systems to Innovative Interfaces
  • Firm also closes $725 million deal of Jabil Circuit unit

HGGC paid an undisclosed sum for AutoAlert, which provides cloud-based data mining analytics and dealer portfolio management technologies to retail automotive dealerships in North America. Company founders Boyd Warner, CEO, and Jeff Cotton, COO, will reinvest their proceeds from the deal to retain a minority stake in the business.

Separately, HGGC also teamed up with JMI Equity to buy Polaris Library Systems, a provider of integrated library systems technology to public libraries in the United States. It will be combined with Innovative Interfaces, which HGGC and JMI Equity bought in 2012.

Rich Lawson, CEO, managing partner and co-founder of HGGC, said the firm deployed its deal-sourcing approach of working closely with management for months ahead of its bid to craft a growth plan and to offer founders and other top executives a stake in the firm.

“Our strategy is contrarian,” Lawson said. “When you have founder both selling majority control and reinvesting, they become buyers as much as sellers, and purchase price multiples (in auctions) aren’t as much of a factor.”

After looking for a disruptive player in the grocery store channel and buying MyWebGrocer last summer, HGGC had been searching for a company in the even larger automotive sector. It came across AutoAlert, which had been growing at about 70 percent a year between 2009 and 2013.

“Imagine the challenge of approaching someone who’s been cold-called by 100 firms. You have to spend time developing a rapport with these folks … opening up your references, meeting with partners,” Lawson said. “We spend six or eight months and we sit down and develop a plan to help a brand go global. We demonstrate our track record, working to get to know them and introducing them to the other people in our current portfolio, and then we get very well versed in their business and lay out a game plan.”

The Polaris Library Systems and AutoAlert transactions mark HGGC’s third and fourth acquisitions so far this year as it taps into capital from HGGC II, its newest buyout fund targeting $1 billion with placement agent Evercore Partners.

Both Polaris and AutoAlert were announced on April 1, along with the closing of HGGC’s previously announced deal to buy the contract warranty unit of Jabil Circuit Inc to grow revenue at its iQor platform to more than $1.5 billion. The purchase price on the Jabil unit was $725 million and it ranks as the largest add-on deal in HGGC’s history.

Also this year, HGGC bought Serena Software, the largest independent provider of application development technology, from Silver Lake, as its first platform deal of 2014.

HGGC acquired Buy4Now Technology Group, a provider of on-line commerce software to grocery and retail clients, as an add-on for MyWebGrocer.