As a business reporter, I enjoy following acquisition stories involving young technology companies. The combination of old industry stalwart and upstart newcomer is often more compelling than the individual parts.
For the retail automobile industry, these buy-sell transactions are becoming increasingly important.
Sometimes, a larger technology company grabs a small upstart that produces a technology it desires, an innovation focused on a product or service that would help expand a current platform. Maybe that smaller player is about to run out of money or is limited in its market reach. A buyer with deep pockets can help its technology achieve its full potential and reach a wider market.
This brings me to Reynolds and Reynolds' announcement last week that it had acquired DealerCorp Solutions, a Canadian software company.
Reynolds, a 157-year-old dealer management software company, has an international reach. DealerCorp debuted in 2014. Its main product — Deskit — is cloud-based software whose functionality helps retailers with digital retailing, including desking, meaning figuring out payment options with customers, as well as finance-and-insurance operations, inventory products and services and more.
Realizing early on the technology could complement the products and services it already had, Reynolds launched the partnership as a licensed reseller of the software. It then worked with DealerCorp to improve the technology until acquiring the startup outright, Reynolds said.
Reynolds and Reynolds promises to pursue more acquisitions in the coming months.
Now, it and companies like it are leveraging the innovation injection an acquisition brings to morph into something that looks a little different and much more interesting in combination.
