Thomas H Lee is preparing to put Auction.com, an online marketplace for bank-owned residential properties, on the block, three sources familiar with the situation told PE Hub.
JP Morgan and Goldman Sachs are set to advise the company on its sale process, which remains in its early stages, the sources said.
Auction.com, based in Irvine, California, provides an online platform that allows individuals and investors to buy and sell bank-owned and foreclosed residential properties through both desktop and mobile channels. The company has enabled more than $50 billion of residential property sales on its platform, according to THL.
Auction.com generated around $150 million of EBITDA in 2019, the sources said.
Unlike many businesses that are delaying their sale processes or adjusting value expectations in the wake of the covid-19 pandemic, growing economic uncertainty could prove advantageous for Auction.com. In fact, the company is well-positioned to generate value in a distressed time given its business model, two sources said.
Auction.com could sell for around $3.5 billion if the market holds, and in a recessionary scenario, a deal could be valued even higher, one of the sources said.
At those levels, a sale would generate a strong return for Thomas H Lee Partners.
THL initially acquired Ten-X, the parent company of Auction.com, for $1.6 billion in October 2017, sources told the Wall Street Journal at the time.
In 2016, Ten-X launched a separate platform known as Ten-X Commercial, which provides a marketplace for commercial properties.
Stone Point Capital and CapitalG, formerly Google Capital, are minority investors in Ten-X.
Ten-X and Auction.com were founded in 2007 by long-time auctioneers and entrepreneurs Jeff Frieden and Rob Friedman. Auction.com is led by CEO Jason Alnutt, who stepped into the role in November 2018.
THL and Goldman Sachs declined to comment. JP Morgan and Auction.com did not return requests for comment.
Action Item: Read PE Hub’s latest coverage of covid-19’s impacts on the M&A landscape.