Venture Capital Firm IVP Acquires Ziff Davis Enterprise Group

HIL ANDERSON, SENIOR EDITOR
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New York, NY – Ziff Davis reached a definitive agreement this week to sell its Enterprise Group, which includes a portfolio of events in the high-tech sector, for $150 million to a subsidiary of Insight Venture Partners (IVP), a New York venture capital company that specializes in software and Internet companies.

The deal, which was announced nearly a year after Ziff Davis began exploring the sale of the company, does not include the DigitalLife trade show and brings in a buyer with no current links to the exhibition market. DigitalLife, a four-day event at Jacob K. Javits Convention Center in New York that features 137,000 net square feet of exhibit space, is part of Ziff’s Consumer division.

Ziff announced that the transaction involved approximately $150 million in cash, subject to adjustments including a potential earn-out of up to $10 million in cash based on the performance of the Enterprise Group this year.

The Enterprise Group includes digital and face-to-face events worldwide. It also consists of online properties including eweek.com, cioinsight.com and channelinsider.com. Its publications include the magazines CIO, eWEEK and Baseline. It also boasts a database of 3.5 million business and technology users.

IVP was founded in 1995 to put together investments in software and Internet companies. The company says it has a $1.5 billion capital base and boasts a portfolio of primarily niche producers of application and infrastructure software, software-enabled services and Internet and new media.  Among its Internet-and-new-media holdings is Jagex Limited, which caters to the “massive multiplayer online gaming” market and is in the same business orbit as Ziff’s Gaming Group. The Gaming Group is considered Ziff’s most valuable property.

While IVP has no events of its own, it gave no indication there would be any immediate changes in the Enterprise Group’s operations. The announcement said the group’s staff would remain in their current locations in New York, Boston and San Francisco. “We look forward to working closely with the talented management team to help take this business to the next level in the dynamic technology marketplace,” said IVP Managing Director Deven Parekh. “Many of our portfolio companies have successfully advertised with the Enterprise Group for years and we are proud to be associated with these brands.”

Evercore Partners acted as financial advisor to Ziff Davis while Kirkland & Ellis LLP acted as its legal advisors. O’Melveny & Myers LLP acted as legal advisors to Insight Venture Partners.

Prior to the IVP deal, Ziff Davis published seven magazines aimed largely at the computer user market, including PCMagazine, eWeek and CIO Insight. However, it discontinued its Sync and Extreme Tech publications in 2006.

Ziff Davis announced last July it had engaged Lehman Brothers and Evercore Partners to assist the board in assessing any strategic alternatives available to Ziff.

CEO Robert Callahan said at the time that while no actions were guaranteed, the assessment would be wide open and take into account “alliances, mergers and sale or joint venture of all parts of the company.”

Earnings for the first quarter of 2007 showed consolidated revenues at $32.7 million, down 12% from the first quarter of 2006 with the exclusion of revenue from six discontinued publications. At the same time, the consolidated EBITDA increased to $3.1 million, up 12% from $2.7 million in the same period last year.

The company announced June 13 that Ziff Davis Game Group had formed a strategic marketing partnership with Gottaplay Interactive Inc. The deal linked Ziff’s 1UP Network with Gottaplay’s rental and trading platform. Gottaplay became the exclusive integrated provider of rental and trading services for 1UP Network.

Reach Robert Callahan, CEO of Ziff Davis at (212) 503-3500 or Robert_Callahan@ziffdavis.com; Deven Parekh at (212) 230-9216 or dparekh@insightpartners.com