J.D. Power, the well-known provider of data analytics and market research for various industries, including automotive, may be sold by its owner Thoma Bravo LLC, according to a report by Bloomberg News. The private equity firm is seeking a deal of about $8 billion, including debt, for J.D. Power, and is working with a financial adviser to gauge interest in the company. The discussions are still at an early stage, and there is no certainty that they will result in a deal. Here are the details of the news and its implications for the industry.
The Background and History of J.D. Power
J.D. Power was founded in 1968 by James David Power III, who started the company in his kitchen with a $2,500 loan from his wife. The company began by conducting customer satisfaction surveys for the automotive industry, and soon expanded to other sectors, such as financial services, health care, and travel. The company became famous for its ratings and awards, which are based on data and analytics from millions of consumers and businesses.
J.D. Power was acquired by McGraw-Hill Companies in 2005 for $388 million, and then by XIO Group, a Chinese investment firm, in 2016 for $1.1 billion. In 2019, Thoma Bravo bought J.D. Power for an undisclosed amount, and merged it with Autodata Solutions, a data and software provider for the automotive industry. The combined company is based in Troy, Michigan, and has more than 12,000 employees worldwide.
The Reasons and Motivations for the Potential Sale
Thoma Bravo is considering selling J.D. Power for several reasons and motivations, according to the report by Bloomberg News. One of them is the strong demand and interest for data and analytics companies, especially in the wake of the pandemic, which has accelerated the digital transformation and innovation across industries. J.D. Power, with its reputation and expertise in data and analytics, could attract many potential buyers, such as other private equity firms, strategic acquirers, or public investors.
Another reason is the high valuation and profitability of J.D. Power, which could generate a significant return for Thoma Bravo. The private equity firm is seeking a deal of about $8 billion, including debt, for J.D. Power, which is more than seven times the amount that XIO Group paid for the company in 2016. J.D. Power also reported a revenue of $1.4 billion and an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $350 million in 2023, according to the report.
A third reason is the opportunity and challenge for J.D. Power to grow and innovate in the competitive and dynamic data and analytics market, which is undergoing rapid changes and disruptions due to new technologies, such as artificial intelligence, big data, and cloud computing. J.D. Power, which has been a pioneer and leader in the field for decades, may need a new owner or partner that can provide more resources, support, and vision for the company to maintain and enhance its position and performance in the market.
The Implications and Consequences of the Potential Sale
The potential sale of J.D. Power by Thoma Bravo could have various implications and consequences for the industry and the customers, depending on the outcome and the buyer of the deal. One of them is the impact and influence of J.D. Power on the automotive industry, which is one of the main and largest sectors that the company serves and studies. J.D. Power, with its ratings and awards, has been a trusted and respected source of information and insight for the automotive industry, and has helped shape and improve the quality and satisfaction of the products and services offered by the automakers and dealers.
Another implication is the future and direction of J.D. Power as a data and analytics company, which could change or remain the same depending on the strategy and vision of the new owner or partner. J.D. Power, which has been expanding and diversifying its portfolio and capabilities over the years, could continue or accelerate its growth and innovation, or could face some challenges or difficulties, depending on the market conditions and the competitive landscape. J.D. Power could also leverage or lose some of its assets and advantages, such as its brand, reputation, expertise, and data, depending on the deal terms and the buyer’s intentions.
A third implication is the opportunity and risk for the customers and the consumers, who rely on and benefit from J.D. Power’s data and analytics, to make informed and smart decisions and choices. J.D. Power, which has been providing valuable and reliable data and analytics to millions of customers and consumers across industries, could enhance or diminish its value and quality, depending on the quality and integrity of the data and analytics that the company produces and delivers. J.D. Power could also increase or decrease its accessibility and affordability, depending on the pricing and distribution of the data and analytics that the company offers.