The Reynolds and Reynolds Company is a private company headquartered in Dayton, Ohio. Founded in 1866 as a business forms printing company, the company started serving automotive dealers in 1927. It has approximately 6,000 employees worldwide, and it primarily develops and sells dealership management systems to automotive retailers. Reynolds’s products and training offerings include Web and customer relationship management solutions, e-learning and consulting services, documents, data management and integration, networking and support and leasing services. Reynolds serves automotive retailers and manufacturers globally through Kalamazoo-Reynolds and Reynolds Europe (formerly DCS).
The Reynolds and Reynolds Company has a long history as a public company in the Dayton, OH area. Subsequently, the company was purchased and privatized in 2006 by Robert "Bob" Brockman, the owner of $530 million Houston-based Universal Computer Systems Inc. Brockman serves on the boards of Rice University and Baylor College of Medicine in Houston and has been described as "arguably one of Houston's wealthiest but least-known businessmen." He has also been described as a "tough and savvy businessman who operates on his terms."
Brockman's $2.8 billion buyout was funded primarily by a group of investors that includes Goldman Sachs Capital Partners and San Francisco-based Vista Equity Partners. For the fiscal year ended Sept. 30, 2005, Reynolds reported net income of $33.3 million on revenue of $969 million. The final conditions of the merger allowed for $40 in cash for each Reynolds and Reynolds Class A common share and $40 in cash for every 20 Reynolds and Reynolds Class B common share.
Company History
In 1866, the company began when Gardner & Reynolds was founded in Dayton, Ohio, by Lucius D. Reynolds, and his brother-in-law, James R. Gardner. Their small manufacturing company was one of the first to print standardized business forms. The firm became Reynolds & Reynolds in 1866 when Gardner sold out to Ira Reynolds, Lucius Reynolds's father. Eventually, the firm was incorporated as The Reynolds and Reynolds Company in 1889. Subsequently in 1920, Reynolds created the first standardized accounting forms and a paper-based accounting system for Chevrolet and its retailers. The innovation also laid the groundwork for Reynolds to become the major forms and systems provider to the automobile retailer market.
Recognizing the opportunity to advance the growth of the forms business, in 1960 Reynolds entered the electronic data processing (EDP) field when it purchased Controlomat. Throughout the 1960s, Reynolds became the first form company to offer computer services to automotive retailers throughout the nation – a key step in transforming the way individual retailers and car companies managed their businesses. The software offerings and products eventually evolved into the Reynolds "ERA dealer management system", which integrated all business office functions. The company expanded further in April 2000 with the acquisition of Cyber Car and Automark under the holding group named HAC Group, two companies valued at US$200 million; later in 2003, Reynolds moved into the global automotive retailing marketplace when it acquired German software provider Incadea AG.
In September 2006, The Reynolds and Reynolds Company and Universal Computer Systems, Inc. completed a merger. The merger transaction was valued at $2.8 billion, and included the assumption of Reynolds’s debt with Reynolds and Reynolds becoming a wholly owned subsidiary of Universal Computer Systems, and the new company coming to be known as The Reynolds and Reynolds Company. According to press releases and company claims, support for all existing services, products and contracts will continue to be honored indefinitely.
Bob Brockman, CEO of UCS is currently the Chairman of the new combined company.
Merger Issues
Five months after the merger was completed, the new ownership of the company began to make broad changes to the daily operations of the business. As the Houston Business Journal reported, "the blending of the two firms has created a culture clash that's led to the departure of Reynolds employees, from executives to field technicians, both through lay-offs and of their own volition, since last August . Reynolds' local employee base has shrunk at least 10 percent since January 2006." The departure of the work force culminated in October 2007 when pre-merger CEO Fin O'Neill left the company.
Newly implemented workplace policies, such as a tobacco-free campus and a four-month waiting period for insurance benefits created concern and discord among existing Reynolds employees. About 45 employees left the company after refusing to sign a new employee agreement which contained a three years non-compete clause.
In January 2008, vice president of finance Carolyn Wall filed a lawsuit against Reynolds claiming that "it breached two contracts with her and engaged in fraudulent misrepresentations and concealment of facts meant to deceive her." Wall claimed that as a result of the merger the organization is struggling with low employee morale, low pay and an exodus of employees; the lawsuit also alleges that Wall was demoted as a result of her complaints.
Many existing Reynolds and Reynolds car dealer customers were concerned that UCS required dealers to sign long-term contracts, with some contracts being as long as 10 to 15 years. Reynolds usually required a 1 to 5-year contract. The popular Ward's Dealer Business magazine warned that "Dealers will feel the effects of this acquisition for years to come."
In 2006 Dealer Computer Services, a wholly owned unit of The Reynolds and Reynolds Company, attempted to require Hammonasset Ford-Lincoln-Mercury Inc., of Madison, Connecticut to purchase a $100,000 computer system from Reynolds as a pre-requisite for a software upgrade. After the dealership refused to purchase the additional hardware and an arbitration panel ruled in favor of the dealership, Dealer Computer Services sued to vacate the arbitration panel ruling and lost after the U.S. District Court in Houston upheld the arbitration panel's ruling. According to Dallas attorney Richard Faulkner, this ruling may strengthen another class-auction lawsuit filed against Reynolds by approximately 70 dealerships which also refuse to purchase the $100,000 computer hardware. Thomas Schwartz, a Reynolds spokesman placed the beginnings of the lawsuit before the merger: "It was well before the merger, and it was just one of those things that wound its way through."
A December 2008 Tech Crunch article used employee feedback and ratings to rate The Reynolds and Reynolds Company as the "third worst place to work" in the United States.
References
- ^ The Reynolds and Reynolds Company. "Profile" . http://www.reyrey.com/company/index.asp .
- ^ "Local reaction mixed over Reynolds' deal". Dayton Business Journal . http://houston.bizjournals.com/dayton/stories/2006/08/21/story6.html . Retrieved 2009-01-05 .
- ^ a b c d "Houston millionaire steers UCS into buyout". Houston Chronicle . http://houston.bizjournals.com/houston/stories/2006/08/21/story5.html . Retrieved 2009-01-05 .
- ^ "The Low-Profile Guy Behind the UCS-Reynolds Hookup". Ward's Dealer Business . http://wardsdealer.com/ar/ucs_reynolds_hookup/ . Retrieved 2009-01-06 .
- ^ a b "Schedule 14A". United States Security and Exchange Commission . http://ccbn.10kwizard.com/xml/download.php?repo=tenk&ipage=4394311&format=PDF . Retrieved 2009-01-05 .
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