July 15, 2018 — CDK Global will announce Monday morning it is acquiring the auto retail industry’s leading customer relationship management firm ELead1One, according to several sources familiar with the deal.

The acquisition checks off several boxes for CDK while filling a big product hole — a viable integrated CRM platform with significant market share. ELead’s call center business is also a big plus along with its service scheduling and marketing solution. Also important is the fact CDK is getting a company with revenue of well over $100 million that is growing.

TBR has predicted the move several times since January 2015 because of the many synergies. The companies began talking officially about a year ago and finally closed it last week. Investment banking firm Portico Capital advised ELeadOne on the sale.

The deal, which was submitted to the Federal Commission several days ago, should close within a month following the regulatory review. Unlike the desired acquisition of competitor AutoMate, which the FTC stopped in March due to anti-competitive reasons, the ELead1One deal should not have any issues.

Financial terms of the deal likely will be announced once the review is completed. TBR estimates CDK likely is paying in the $550 million range for the Valdosta, GA – based technology firm. It will be the biggest deal in the automotive retail vendor space over the last couple of years.

ELead1One is the biggest privately-owned technology company in the auto retail space that is still owned by the original founders, Hugh and Judy Hathcock. (Reynolds and Reynolds, with more than $1.7 billion in annual revenue is also privately-owned, but has had numerous owners, including a stint as a public company prior to current owner Bob Brockman taking it private.)

The Hathcocks started the company in 1985 making cookies for dealers as a tool to help them retain customers. In a 2006 interview with Ward’s Dealer Business, they recounted how they spent hours driving throughout the Southeast pitching the concept to dealers. Their first customer was the Coggin Group in Florida.

They pivoted in the 1990’s to becoming a leading call center provider for dealers wanting to outsource their business development centers. That move took the company from $3 million in annual revenue to more than $20 million a year. A second pivot in the late 90’s turned the company into a full-fledged technology provider. A name change to ELead1One reflected the new focus.

Over the years, the company expanded to Destin, FL while building a fully integrated customer relationship management platform that includes a newly-developed service scheduling and marketing solution that has put a charge into ELead’s revenue growth the last couple of years.

As word of the acquisition began leaking out late Friday night, one question being asked is whether ELead’s culture will survive ownership from a publicly traded company. Sources say Hugh is staying with ELead and that CDK has taken steps to make sure it’s not the typical arrangement where the founder stays for a year or two to help with the transition, but rather, is a long-term partnership.

CDK likely will not change much in how ELead1One operates for the near future. The branding will remain as will most of the employees. The culture the Hathcocks built is a big part of ELead’s success with its more than 3,000 dealership customers, including seven of the top 10 dealer groups. Whether CDK can truly maintain that will be interesting to watch.