KAR Auction acquires startup tech company for $43 million

April 19, 2017

Carmel-based KAR Auction Services Inc. has acquired Chicago-based startup CarCo Technologies Inc. in a $43 million stock purchase, a move KAR says will beef up its data-analytics capabilities.

The deal, announced Wednesday, closed on Friday.

CarCo, which does business as Drivin, aggregates automotive retail, pricing, registration and other data, giving customers access to pricing information and helping match buyers with sellers. 

“This is a pretty meaningful capability and technology play for us,” said KAR spokesman Tobin Richer. “It’s not just their existing business model. It’s about their capabilities and the analytics behind them.”

Drivin’s offerings include a predictive pricing tool that helps identify how much a vehicle is likely to sell for at auction based on condition, age, location and other factors. DRIVIN also has tools for inventory management and vehicle matching, which helps connect vehicle buyers with sellers.

KAR has its own data science and analytical teams, Richer said, but the DRIVIN acquisition will boost those capabilities.

Drivin was launched in 2015 by the founders of online marketplace Groupon, Brad Keywell and Eric Lefkofsky; along with Drivin CEO Kayne Grau and Drivin Chief Operating Officer Justin Mahlik. The company has raised about $17 million in capital from tech investment firms Lightbank and Columbus Nova Technology Partners.  

KAR said it intends to retain Drivin’s Chicago location and it's 55 employees, including “key members of the Driven leadership team.” Grau will continue to lead Drivin as president and Mahlik will retain his position as COO, KAR said.

Drivin's offices are based in the 600 West Chicago building, a 1.25 million-square-foot former warehouse that was built in 1908 to house Montgomery Ward & Co.'s mail-order catalog business. The location has become a tech hub in Chicago that houses companies including Groupon, which has more than 2,000 employees in the building.

“We’re thrilled to be part of KAR and a culture that shares our entrepreneurial spirit,” Grau said in written comments. “With data from more than 40 million transactions and ancillary services performed each year, KAR’s platform provides a unique opportunity to scale, syndicate and evolve Drivin’s capabilities. We look forward to powering the future of automotive remarketing for KAR’s businesses and customers around the globe.”

KAR offers auctions and other services for the used-car and salvage market, including financing and logistics. The company has about 17,400 employees throughout the United States, Canada, Mexico and the United Kingdom, including about 1,400 people in the Indianapolis area. With the Drivin acquisition, KAR will have nearly 600 employees in eight different Chicago-area locations.

Shares of KAR were trading at $43.23 Wednesday morning, up 48 cents from Tuesday’s close. Over the past 52 weeks, the stock has traded from $35.68 and $47.03 per share.


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