Two years after selling Autodata to Bowmark and Five Arrows, Arrowpoint Advisory advised them on its disposal to Solera.
Step 1: The 2014 Process
When Bowmark and Five Arrows acquired Autodata for £143m in May 2014 (in a process ran by Arrowpoint Advisory), there was no shortage of questions raised about the high price paid for the company.
Various parties involved in the auction said that it was the most competitive, demanding process they had participated in.
"It was seen to be an outlier," says one investment banker. "There were a number of people who raised an eyebrow when they saw the price it went for."
Those who missed out on Autodata included a host of buy-out firms, but most notable was a US strategic acquirer, Solera.
Step 2: Autodata
The intensity of the Autodata sale process begs the question: what is so special about this company?
Launched in 1975, Berkshire-based Autodata began life producing trade and DIY manuals for garages and car aficionados. Now it provides on-demand and regularly updated technical information to the automotive aftermarket via an online web application.
Autodata is no provincial UK business, however. The company has technical information on 136 manufacturers and 40,000 models of vehicles, and its customers include corporate chains and independent dealers in more than 44 countries.
It also has one attribute which private equity firms are always greatly appreciative of, quality of earnings.
Under the ownership of Bowmark and Five Arrows the company further broadened its offering with acquisitions in France, Sweden and Finland, adding to its German and Australian offices. It more than doubled its coverage of vehicle models and increased its database of manufacturers by 75 per cent.
Step 3: Solera
Texas-based Solera is a provider of software, primarily for the insurance and automotive markets. It floated on the New York Stock Exchange in 2007 but was taken private in 2015 for $6.5bn by a consortium including Vista Equity Partners.
Despite missing out on Autodata the first time around Solera remained determined on taking its M&A strategy abroad, with the UK a particular focus. It maintained its relationship with Arrowpoint Advisory, a relationship which was to prove fruitful.
With the aid of Arrowpoint Advisory the company acquired another UK-based business, Montagu Private Equity-backed CAP, another automotive data provider. The off-market deal valued CAP at £288m.
With a foot firmly planted in the UK market and its own ambitious private equity backer, Solera's interest in Autodata remained strong even though Bowmark and Five Arrows were just two years into their investment.
"It was acknowledged that Solera was a natural home for the business. They were interested the first time around and they had kept in touch with me and Bowmark and Five Arrows," explains Richard Fetterman, the Arrowpoint Advisory Managing Director who led both Autodata processes and the CAP deal. "As thoughts started to turn to exit the view Bowmark and Five Arrows took was: 'let's give Solera a look at this, and if they step up let's do a relatively swift deal with them and if not let's move to a process.' We gave them an early look and to be fair to them they delivered."
Fetterman believes Solera was the most logical acquirer of Autodata and that it can thrive under their ownership "Solera is a global, very well-run organisation and if you overlay the Autodata product and management team with the Solera footprint and some of the know-how they have, I think it is a great deal for everyone," he says.
Step 4: The verdict
This is an excellent outcome for Bowmark and Five Arrows that reflects well on their decision-making. It is also worth noting that the 2014 auction has remained an outlier in terms of ferocity, a nod to the exceptional quality of Autodata.
"My sense is that people who 'overpay' for the highest quality businesses will still do better than compromising and trying to look for a bargain which isn't of as high quality" says the investment banker. "If you're paying a turn or two more on EBITDA for the right business, you will be fine."