Quinstreet Paid $17.5 Million for Ziff Davis Enterprise Assets
Quinstreet paid $17.5 million to acquire Ziff Davis Enterprise assets, including eWeek, Baseline, CIO Insight, Channel Insider and other IT media assets, according to a February 7 SEC filing viewed by The VAR Guy. Quick — but unconfirmed — math suggests Ziff Davis Enterprise’s valuation may have fallen more than 85 percent since 2007. So what triggered the steep drop?
Simply put: Insight Venture Partners apparently paid far too much when it purchased Ziff Davis Enterprise for roughly $150 million to $160 million in 2007, or roughly 2X revenues, The VAR Guy believes.
Now, Quinstreet is apparently valuing those Ziff Davis Enterprise assets at $17.5 million. Still, those various figures may not represent an apples-to-apples comparison. After all, Quinstreet made an asset purchase but didn’t fully acquire Enterprise Media Group Inc. (Ziff Davis Enterprise’s parent).
The Ziff Davis Enterprise portfolio certainly had some great assets — eWeek, face-to-face and online events, and a big database of IT managers. But Insight Venture Partners apparently funded the 2007 Ziff Davis Enterprise buyout with a $137 million credit facility from GE Commercial Finance.
The situation was similar to a consumer paying too much — and taking out too big a mortgage — during the U.S. real estate housing bubble, The VAR Guy believes. From 2007 to 2011, Ziff Davis Enterprise worked to transform itself into a fully digital media company, but the journey included debt payments that hampered the company’s innovation efforts, our resident blogger believes.
Quinstreet Steps In
Last week, Ziff Davis Enterprise’s bubble finally popped. Quinstreet purchased the Ziff Davis Enterprise assets for $17.5 million in cash, according to that February 7 SEC filing. The move seeks to diversify Quinstreet beyond the education and financial services verticals and into the IT media market — though most of Quinstreet’s focus apparently will involve lead generation rather than content.
Company watchers say Quinstreet appears to be cutting roughly 100 of roughly 130 Ziff Davis Enterprise positions. The Quinstreet SEC filing was short on details but did offer the payment price on Ziff Davis Enterprise. It stated:
“On February 3, 2012, the Company acquired certain assets of Ziff Davis Enterprise from Enterprise Media Group, Inc., a New York-based online media and marketing company in the business-to-business technology market, for $17,526 in cash paid upon closing of the acquisition. The results of Ziff Davis Enterprise’s operations will be included in the consolidated financial statements following the acquisition date.
The Company is currently evaluating the purchase price allocation following the consummation of the transaction. It is not possible to disclose the preliminary purchase price allocation or unaudited pro forma combined financial information given the short period of time between the acquisition date and the filing date of this report.”
(Note: The $17,526 figure is “in thousands,” hence $17.5 million.)
More details of the Quinstreet-Ziff Davis Enterprise deal may gradually leak out in SEC filings over the next few months. But in the meantime, The VAR Guy wishes all Ziff Davis Enterprise veterans best wishes as they navigate the Quinstreet deal and/or pursue new opportunities.