Robert T. Brockman may be the most influential person today among information-technology vendors in the automotive retail space.
But he doesn’t want you to know it.
Brockman is the founder and CEO of dealer-management system provider Universal Computer Systems Inc. in Houston. Recently, he put together the deal with Goldman Sachs Capital Partners and San Francisco-based Vista Equity Partners to acquire competitor The Reynolds and Reynolds Co. for $2.8 billion, a case of a smaller company buying a much bigger one.
If it goes through, the deal drastically could alter the industry’s landscape for years.
Meanwhile, Brockman quietly is amassing several companies that serve dealers. UCS is a private company and information is difficult to come by, but Brockman reportedly has acquired four of the six key security companies that exhibited at the National Automobile Dealers Assn. convention in February.
Employees may not even be aware of who owns their companies. They compete as if they have different owners. The secret got out only because the four each listed a UCS address in theconvention handbook.
Brockman also acquired call measurement and tracking company, CallBright, sometime last year. Meanwhile, one of his partners in the Reynolds deal, Vista Equity, recently purchased Who’s Calling, a competitor to CallBright. It is not clear, however, if Brockman had anything to do with the deal, but the connection is there.
And those are among the known deals.
Brockman eschews publicity – his media handlers do not have a picture or a biography of him on file. It has been years since he has granted any interview requests, if at all.
Despite keeping a low profile, Brockman sits on the board at Rice University and Baylor College of Medicine. People who work with him say he is philanthropic but refuses to trumpet news of his donations.
Customers and vendor partners say he is a tough and savvy businessman who operates solely on his terms. Like him or not, Brockman has built an impressive business in Texas that now has more than 2,000 employees and offices in the U.K., Belgium, and the Netherlands.
UCS says in a recent release it has about 750 dealers as customers. That number likely is much higher. According to Ward’s estimates and others, UCS’s market share is closer to 7%, which translates to almost 1,500 dealerships.
The 750 number might be actual contracts UCS has, which would include dealer groups with multiple points. Nonetheless, UCS’s market share recently dropped to fourth behind Automatic Data Processing Inc., Reynolds and AutoSoft.
The Reynolds acquisition will make the company the No.1 provider of technology systems to dealers. Shareholders are expected to approve the deal in a vote likely to be held early this fall.
Meanwhile, the Securities and Exchange Commission and the Department of Justice also have to approve the deal.
According to media reports, Brockman began the company in his living room in 1970, providing dealerships with parts-inventory data.
In 1982, UCS began offering computer systems to dealers. The company grew quickly, claiming third place in the DMS space behind Reynolds and.
UCS acquiredMotor Co.’s Dealer Computer Systems in the mid-1990s, which later became the basis for Ford’s electronic-parts catalog for its dealers. UCS recently sold DCS to competitor ProQuest after losing a contract last year with Ford to license its parts data.
On October 7, Credit Suisse, UCS’s advisor, approached Reynolds’ Chairman of the Boad Philip Odeen about a possible deal that would net shareholders $33-$35 a share. Brockman then called Reynolds’ CEO Fin O’Neill with more specifics.
In mid-November, the Reynolds board of directors rejected the offer claiming it had concerns that UCS actually could fund the deal and citing its own issues with the SEC in having to refile the Form 10-K for the period ending Sept. 5, 2005.
Brockman persisted, sending a letter to the board with a deadline, sparking speculation he threatened to take the deal directly to Reynolds’ shareholders should the board continue to resist.
Whatever was in the letter, it resulted in further discussions. As the talks became more substantive, Reynolds approached three other companies in late June inviting them submit bids, which they declined to do, leaving UCS as the only, albeit, attractive option.
Once the price increased to where Reynolds’ shareholders will receive $40 per share, it was game over and the board had to accept.