After more than a year of trying and going back and forth on various suitors, Ziff Davis has “entered into a definitive agreement” to sell it enterprise group to an affiliate of the NYC-based private equity firm Insight Venture Partners, for about $150 million in cash, including a potential earn-out of up to $10 million in cash based on the performance of the group this year. This was the division Quadrangle almost bought last year.
The transaction is subject to closing conditions, including receipt of specified third party consents, the funding of committed bank financing, the completion of an audit of the Enterprise Group and other regular closing conditions, and is expected to close in Q3. More after the jump…
The enterprise group includes magazines such as eWEEK, CIO Insight, and Baseline magazines; sites such as Eweek.com, Baselinemag.com and others; events; and a database of 3.5 million business and technology users. The Enterprise Group employees will remain in their current locations in New York, San Francisco and Boston. More details in release.
Two more division now left: the Consumer Small Business Group and Game Group. The CSB group consists of PC Magazine, ExtremeTech and others. The Game group consists of Electronic Gaming Monthly and 1UP.com. Would be interesting to see if they continue going at it alone, without selling these divisions…no hints in the release either way.
Minsider Blog: With an EBITDA from end of Q1 last year to end of Q1 this year of $13.8 million, that puts the transaction multiple at 10.87 (for $150) or 11.59 (for $160). Revenue over that same period was $78.8 million, which means that Willis got about 2 times revenue for the business. These multiples are fairly in-line with those we’ve seen for B2B media businesses that have slightly less-developed online capabilities. More online-centric businesses have gotten multiples over 12 in the past year or so.
Foliomag: Unloading the Enterprise Group certainly helps and the $150 million will go a long way toward the $400 million owner Willis Stein needs to make before it begins to recoup its investment. But the next two divisions–the $62.3 million Consumer/Small Business Group and the $39.1 million Games Group–don’t generate as much revenue, which will make the $400 million target that much more difficult to reach.
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