Sejal Pietrzak may be a newcomer to the staff at DealerSocket Inc. in San Clemente, but the private equity firm that owns the software-as-a-service company knows her well—the new president and chief executive was part of the management team at ACTIVE Network in Dallas, which Vista Equity Partners agreed to sell last month to Global Payments Inc. for $1.2 billion.
Pietrzak replaced Jonathan Ord, who co-founded the company in 2001 with college friend and Chief Product Officer Brad Perry. Ord retained a substantial share of DealerSocket after Vista acquired a majority stake in 2014 for $239 million, and continues to serve on the company’s board of directors and as Pietrzak’s adviser.
“Jonathan is still very much involved,” she said. “He and I both see this as an additive to DealerSocket. It’s great timing and a great opportunity for me to take on this role.”
About 11,000 dealerships use DealerSocket’s software platform, which enables them to integrate data on vehicle and parts sales, customer relationship management, service and inventory. It employs more than 1,100 and generates an estimated $200 million in annual revenue.
Pietrzak, who helped online event platform ACTIVE Network grow from 150 employees to more than 2,200 during her 12-year tenure, is coming to DealerSocket with “fresh eyes on the business.”
“The real goal for this company is continuing to significantly grow, and have an opportunity to scale as we grow,” she described her strategy. “I don’t think as much in terms of change as I think in terms of continuing on [Ord’s] path, and really focusing on the people … I believe very much in talent development … and meritocracy [that comes] with a lot of training and talent development.”
Pietrzak, on the job for a few weeks, “has been really impressed … with the culture, the excitement and the passion, the love for DealerSocket.”
Aside from staff development, she will focus on servicing and supporting existing customers, some of whom have been with the company since the beginning. Product innovation also remains a priority.
Vista has more than $30 billion invested in enterprise software, data and technology-enabled businesses. Its financial muscle helped DealerSocket complete a string of bolt-on acquisitions that have expanded its capacity and range of services, including a $55 million buy of Inventory+ and American Auto Exchange in 2015.
Pietrzak will continue to look for “complementary companies” that would “help our business grow,” but declined to say if any deals are in the works.
Here’s the potential rub, though. Vista is three years into its investment in a growing, profitable business.
If all goes well under Pietrzak, she may turn DealerSocket from predator to prey.
“Across the market, the average PE hold is somewhere between four and a half and five years, maybe even less than that,” said Daniel Lubeck, founder and managing director of private equity firm Solis Capital Partners LLC, in Newport Beach. “I think it’s a very fair assumption that they’re thinking about an exit at some point in the next one to three years … The reality is, if you have a private equity firm that’s got a majority stake, you know their job is to create value for their investors.”
Marketplace may also dictate Vista’s timing.
“Anybody in the business of investing in companies, if they have assets that might be ready to be sold, they certainly are considering whether it can go now because it is a very high valuation period,” Lubeck said, adding, “Not a lot of great companies out there for sale, and the ones that are get a lot of attention, so that’s another factor.”
Bringing Pietrzak on board is “an indication that they’re thinking forward and they want to have the best management team possible,” he said.
Ord, “who’s a great guy”—and company founders like him “sometimes develop other interests or have the right skill set to build the company from zero to where he took it,” Lubeck added. “But often what happens is that that’s not the right skill set to take a company to the next level, and you need more of a professional manager or professional management team.” He said he also believes a new boss can make for a smoother transition to a new owner, whereas founders sometimes get in the way.
Vista has been a “great” partner to DealerSocket so far, and “there is no expectation of exiting anytime soon,” Pietrzak said. “What I want to focus on is growing the business, and creating a fantastic place for our employees.”
