Max Digital Acquisition Investor Q&A

  • What are the terms of the transaction? The transaction consideration is $60 million, to be paid in cash. MAX Digital will operate as a business unit within ACV and the company’s CEO, Robert Grandos will continue to run the business post acquisition.

 

  • Who is MAX Digital? MAX Digital is a leading provider of automotive data and merchandising products best known for its flagship inventory management system (IMS) platform, FirstLook. The company serves approximately 1,200 rooftops in the U.S., including some of the largest most respected dealership groups.

 

  • What are the primary benefits of purchasing MAX Digital? ACV’s primary mission is to build and enable the most trusted and efficient digital marketplaces for buying and selling used vehicles. Core to this mission is our ability to provide automotive dealers with technology platforms and complementary solutions to compete in increasingly digital wholesale and retail markets. MAX Digital's inventory and merchandising products create data-driven insights that complement ACV’s current data services offerings resulting in some exciting growth synergies. These synergies include cross-selling MAX Digital’s products into ACV’s customer base and driving additional marketplace volume by arming dealers with tools to price and sell their wholesale and retail inventory more effectively.

 

  • Will you continue to develop and sell MAX Digital products? We plan to operate MAX Digital as a separate business unit and will continue to support, develop and sell their solutions.

 

  • Do you plan to offer ACV’s Marketplace within MAX Digital’s platform? We see some exciting opportunities to leverage ACV’s Marketplace within the MAX Digital platform so dealers can more efficiently and profitably source and sell vehicles in the wholesale market.

 

  • How is MAX Digital’s software priced and delivered to customers? The company’s core software products are priced on a per roof-top basis and are delivered via a SaaS-based subscription model.  

 

  • How will the addition of MAX Digital impact ACV’s current 2021 financial guidance? ACV expects that the transaction will be neutral to its Adjusted EBITDA in 2021. Management plans to update investor guidance as part of its second quarter earnings release in August.

    

  • Does the addition of MAX Digital have an impact on ACV’s long-term growth or margin targets? We believe that MAX Digital provides ACV with some exciting long-term growth opportunities, and given its software business model, has an attractive margin profile.

 

About ACV

ACV provides a vibrant digital marketplace for wholesale vehicle transactions and data services that offers transparent and accurate vehicle information to customers. On a mission to build and enable the most trusted and efficient digital marketplaces for buying and selling used vehicles, ACV’s platform leverages data insights and technology to power its digital marketplace and data services, enabling dealers and commercial partners to buy, sell and value vehicles with confidence and efficiency. ACV’s network of brands includes ACV Auctions, ACV Transportation and ACV Capital within its Marketplace Products as well as True360 and Data Services.

 

 

Forward-looking statements

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements concerning our acquisition and integration strategy, our product offerings and our expectations for future results of operations. In some cases, you can identify forwardlooking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. You should not rely on forward-looking statements as predictions of future events.

 

The forward-looking statements contained in this document are based on ACV’s current assumptions, expectations and beliefs and are subject to substantial risks, uncertainties and changes in circumstances that may cause ACV’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statement. These risks and uncertainties include, but are not limited to: (1) our history of operating losses; (2) our limited operating history; (3) our ability to effectively manage our growth; (4) our ability to grow the number of participants on our platform; (5) our ability to acquire new customers and successfully retain existing customers; (6) our ability to effectively develop and expand our sales and marketing capabilities; (7) breaches in our security measures, unauthorized access to our platform, our data, or our customers’ or other users’ personal data; (8) risk of interruptions or performance problems associated with our products and platform capabilities; (9) our ability to adapt and respond to rapidly changing technology or customer needs; (10) our ability to compete effectively with existing competitors and new market entrants; (11) our ability to comply or remain in compliance with laws and regulations that currently apply or become applicable to our business in the United States and other jurisdictions where we elect to do business; (12) general market, political, economic, and business conditions; and (13) the impact that the ongoing COVID-19 pandemic and any related economic downturn could have on our or our customers’ businesses, financial condition and results of operations. These risks and uncertainties are more fully described in our filings with the Securities and Exchange Commission (“SEC”), including in the section entitled “Risk Factors” in our quarterly report on Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on May 13, 2021, as well as any future filings and reports by us. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forwardlooking statements we may make. In light of these risks, uncertainties and assumptions, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. The forward-looking statements made in this document relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this document to reflect events or circumstances after the date of this document or to reflect new information or the occurrence of unanticipated events, except as required by law.

 

Investor Contact: Tim Fox

tfox@acvauctions.com