Tuesday, September 26, 2006

Incisive Media acquired by Apax Partners for $375MM

Ah, now the puzzle is looking more complete. Many of us in the search industry were shocked over Danny Sullivan's recent decision to leave Search Engine Watch citing:

Last year, Jupitermedia sold the site and the series to Incisive Media. I wasn't unhappy with the sale and chose to let my contract be extended through the end of 2006 as part of it.

I was concerned about moving forward with Incisive, however. I'm far from the only reason behind the success of SEW and SES, but I've played a major role. I helped build both of those assets. Then I watched one company sell them to another without me having any formal capital stake in the sale. That left me wary of history repeating itself. I wasn't going to help this new company grow the business out of the sheer kindness of my heart.

Last Thursday, Incisive Media agreed to a buyout by Apax Partners for 199 MM pounds sterling or $375MM US. Apax Partners is a private equity firm with $20 Billion under management and over the last 30 years has taken 65 firms to the global markets with a combined market capitalization of $34 Billion. According to Reuters the deal represents a multiple of around 23.6 times Incisive Media's earnings per share before exceptionals and amortisation for 2005.

Now with Incisive Media itself having been on the auction block with a subsequent sale to Apax Partners, its beginning to make more sense and their overall rationale in not retaining Danny's services. Why negotiate to disperse additional equity percentages when you are on the verge of cashing out?

Tim Weller, Incisive's CEO garnered $20.8MM US on the sale. Since Search Engine Strategies was a small percentage of Incisive's overall holdings, one can sense their strategy in not negotiating with Danny.

Danny I applaud your foresight in getting out while you could, you certainly deserved some equity in that deal and to your words: Why watch history repeat itself?

It also makes sense as to why Incisive didnt reach out with more of an effort after all of the outcry from Danny's departure - they knew they were in play. I do wonder however if Danny's move caused the deal to be sold for less than it could have? I can't imagine that it would when dealing at that kind of level but it certainly is food for thought.

More on Apax Partners.