January 6, 2020 — DealerOn, Inc. is announcing this morning a strategic partnership with private equity firm NexPhase Capital.
Brothers Ali and Amir Amirrezvani, who founded the website and digital marketing company in 2004, began talking with NexPhase in early 2019 and closed the deal in November.
Over its 15 years, DealerOn has grown into one of the largest website firms in the automotive retail space with more than 3,500 dealerships and 26 automakers using its services.
Last year, DealerOn was one of three website companies (Cars.com’s Dealer Inspire and Cox Automotive’s Dealer.com were the other two) General Motors added to its dealership website program which had long been exclusively held by CDK Global’s digital operations.
DealerOn quietly had been looking for a partner the last couple of years opting to go the investment route rather than selling to a strategic buyer.
Both Amirrezvani brothers are staying with the firm they started. The investment play provides DealerOn with an infusion of capital as it looks to capitalize on the new GM deal and build out a data-driven web automation platform.
The investment shows private capital understands the value website businesses bring to the industry. It’s interesting that the industry is not seeing a consolidation of website firms — rather, the M&A activity is coming from strategic buyers (Cox/Dealer.com; Cars.com/Dealer Inspire) or financial investments such as Primus Capital/Fusion Zone and NexPhase/DealerOn. (Dealer e-Process, estimated to be the fifth-largest website firm, is still privately-owned).
NexPhase was founded as a subsidiary of Moelis and Company in 2007 and formalized as NexPhase in 2016. The company has more than $1.5 billion under management according to its website and has completed nearly 60 investments.
Terms of the investment have not been disclosed but NexPhase typically focuses on investments $25 million and $75 million in which it obtains equity control.
According to its website, NexPhase exited three of its portfolio companies last year while investing in three others — including DealerOn.
Horatio Partners, a small boutique investment bank founded by Sundeep Chanana in 2015, advised DealerOn with the sale. Foley & Lardner LLP served as legal counsel while Lowenstein Sandler LLP provided legal counsel to NexPhase.