Company chief is master in art of persuasion: Audatex has high-profile customers such as Allstate

San Diego Business Journal, May 22, 2006 by Brad Graves

Venture capitalists apparently like what they see in San Diegan Tony Aquila.

The 41-year-old persuaded a Chicago venture capital firm to go in with him to buy the insurance claims business of Automatic Data Processing, or ADP, for $975 million in cash. The sale closed in April.

The unit, called Audatex, has 2,000 employees and operations in 26 countries. California operations are concentrated in the San Francisco Bay Area.

With the deal, Audatex is now a subsidiary of Aquila's Carmel Valley holding company, which is called Solera Inc. It has about 50 employees.

In the transaction, Solera acquired operating companies that generate more than $410 million in annual revenue, and have a global network of about 50,000 customers, according to a press release on the Audatex Web site.

GTCR Golder Rauner LLC, the private equity firm, put up a little more than $230 million for the nearly $1 billion deal. "We debt financed the rest," Aquila said.

New Jersey-based ADP is probably better known as a company that has its logo on payroll checks. And Aquila is of the opinion that the $8.5 billion Fortune 500 company is better off without its insurance claims unit.

"These guys are in the payroll and benefits business," Aquila said. "They're not in the claims business.

"One hundred percent of what I'm about is the insurance and claims processing business. And I love it."

From Body Work To Entrepreneur

Indeed, Aquila, a California native, went from early work in his uncle's body shop to being a serial entrepreneur--in businesses that dealt with making wrecked cars whole again.

A venture called Max Meyer America produced chemical coatings used in car repair.

PPG Industries, a Pittsburgh-based paint, glass and chemical company, eventually bought Max Meyer.

A software venture came afterward.

"My brain's kind of wired in a way where if I see something and there's a more efficient way to do it, 1 try to figure it out," Aquila said.

Around 2000, Aquila founded a company called Ensera, housing it in Silicon Valley. The company provided a Web-based method to deal with insurance claims.

Sixteen months after Ensera's founding, San Diego-based Mitchell International, Inc. bought the business. Mitchell also specializes in insurance claims, and it kept Aquila on, as Mitchell's president. Jim Lindner is Mitchell's chief executive officer.

Aquila's years with Mitchell included a few days of crisis management during the Cedar fire of October 2003. Mitchell is based in Scripps Ranch, a community that suffered greatly from the fire.

Lofty Goals

By then, Aquila was also thinking about going his own way.

"I had set out a goal quite a few years earlier that I was going to either own the company or I was going to leave and start my own," he said. Aquila left Mitchell in December 2004 and spent 2005 as a consultant--and shopping for companies.

He brought some lessons with him.

For one thing, Aquila wanted just one outside investor for his new business venture. His earlier effort, Ensera, had five investors. As a result, "I spent 40 percent of my time managing them rather than building the business," he said.

There was another point about money.

"One thing I had learned in the Ensera business was I didn't want cash to drive my strategy," Aquila said. "I wanted nay strategy to drive the amount of cash I raised. A very important thing, right?

"A lot of entrepreneurs, they go out there, they take whatever cash they can take, and then they start. And then quickly what happens is cash now dictates, and you start compromising your business. You start getting these genetic defects on your strategy because it's all based on your cash.

"And I said, you know what? I'm not going to do that this time. I'm going to develop my strategy and then I'm going to go raise my cash. If I don't get the right amount of cash and the right amount of backing, I'm not going to do it."

The stars aligned, the VCs agreed, and Aquila now oversees more than 2,000 employees as the head of Audatex and its parent, Solera.

The former ADP claims unit has some high-profile customers. This month, Northbrook, Ill.-based Allstate Corp. announced it has renewed its deal with Audatex to provide Allstate adjusters with software called PenPro, as well as brand valuation services called Autosource.

Aquila said he plans to grow his San Diego operation from 50 to 100 employees soon, and "very probably" will grow some more.