KAR Auction Services Inc. announced Tuesday that it finished buying the shares of a Toronto-based tech company it first invested in three years ago—the latest in a string of tech-driven moves for one of largest U.S. auto auction companies.
Carmel-based KAR said it will spend up to $125 million to acquire a 50 percent stake in Nth Gen Software Inc.—also known as TradeRev—whose software allows auto dealers to buy and sell used cars with one another and analyze transactions. KAR said it paid $50 million Tuesday and will pay up to another $75 million over four years depending on TradeRev's performance.
KAR bought its initial 50 percent stake in TradeRev for $30 million in August 2014. If KAR ends up doling out the additional $75 million, it would give TradeRev a $250 million valuation for which KAR only paid $155 million.
TradeRev opened its U.S. headquarters at 12726 Hamilton Crossing Blvd. in Carmel in November 2016. It has 20 employees in Carmel.
"The digital revolution in remarketing has begun, and the acquisition of TradeRev ensures that KAR will maintain its strong leadership position in the mobile app and online auction space," KAR CEO and chairman Jim Hallett said in written remarks. "As a former dealer, I believe TradeRev is the most powerful and innovative mobile app for dealers on the market. By injecting TradeRev with the full force of KAR’s technology, data, financing and service offerings, we plan to accelerate growth across North America and around the globe."
As part of the deal, TradeRev co-founder and CEO Mark Endras will remain on TradeRev's leadership team and assume the role of chief innovation officer at KAR. The latter role entails advancing KAR's innovation agenda, the company said, and "establishing new KAR innovation lab centers" in Toronto, Chicago and Carmel.
TradeRev will be run by Becca Polak, who's spent the last 10 years as KAR's executive vice president, general counsel and corporate secretary.
TradeRev will move in with its new corporate parent in late 2019 when KAR completes its new $80 million corporate headquarters in Carmel.
TradeRev was founded in 2009 by Endras and Wade Chia, Jae Pak and James Tani. It grants dealers access to trade-in and commercial consignment inventory before the inventory reaches wholesale physical auctions. Its mobile app, the company said, mimics the physical auction setting, enabling dealers to partake in live auctions directly from their smartphone, tablet or desktop.