Ziff Davis Sold To Insight Venture Partners–Whew!

I breathed a sigh of relief today when the Ziff Davis deal came through. I was nearly 100% sure, but, as we all know, nothing is ever certain, especially in M&A. Get the details of the deal at minonline.com. There will be full analysis in min’s b2b this week.

For now, some notes on the deal:

1. I’m curious about the $10 million performance incentive bonus that Willis Stein gets if the enterprise group meets certain performance goals in 2007. I can’t find anything anywhere about what the performance goals that need to be met are. Is this incentive like Bob Callahan’s golden parachute, which set such unrealistic sales goals as to have no chance of being met? Or is it realistic that the enterprise group could meet the criteria? Please contact me if you have any information about it.

2. The valuations that we read, it seems, undervalued the company slightly, since the sale price ended up being about $150 (maybe $160) million. 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.

3. What is Willis Stein going to do with this money? Due to the terms of their bonds, they have to use it to pay off their debt within the next 30 days. They can get an extension on this and waivers subject to approval and conditions, but I don’t see them doing this. They may also use the money to restructure some of the debt. It will be interesting to see how they move forward on this.

4. Looks like the $20 million dollar loan that Ziff took out at the end of last year has paid off. See point 2. Maybe they wouldn’t have gotten that extra $12-$22 million if they were under more cash pressure to make a deal soon?

Again, check min’s b2b this week for a full analysis of the deal.