The Enterprise Group's assets include Baseline, CIO Insight, eWEEK, baselinemag.com, cioinsight.com, channelinsider.com, deviceforge.com, eweek.com, microsoft-watch.com and webbuyersguide.com. It also has a database of 3.5 million business and technology users.
Evercore Partners represented Ziff Davis in the transaction, which is expected to close in the third quarter. Enterprise Group employees will remain in their current locations in Boston, New York and San Francisco, according to Ziff Davis.
In the 12 months ended March 31, the Enterprise Group had revenue of $78.8 million and EBITDA of $13.8 million. The sale will leave Ziff Davis with two smaller divisions: the Consumer/Small Business Group ($62.3 million in revenue), which includes Ziff Davis flagship PC Magazine, and the Game Group ($39.1 million in revenue).
"It's a good price and a successful execution," an industry observer who requested anonymity said of the Enterprise Group deal. "But it also means more pressure to come to a resolution on the balance of the business."
The sale of the Enterprise Group will reduce Ziff Davis' debt to about $250 million from its current $390 million. "Can Ziff realize enough net proceeds of the other two divisions to cover the remaining debt of $250 million?" the observer asked. "If not, it's either some sort of settlement with shareholders or bankruptcy court. … The sale really doesn't solve any problems because the interest on the debt keeps on clicking away."
Ed Fitzelle, a managing director at media investment bank Whitestone Communications, said the transaction may be a harbinger to b-to-b media companies.
"The price is surprisingly low if you look at it as a dot-com deal," Fitzelle said. "But you also need to look at [it] in the context of where the b-to-b media industry is headed. In that respect, the Enterprise Group is a hybrid property, with print and online businesses, and it looks fairly successful from the reported numbers. So the question becomes: Is this where the price multiples will settle out for business information companies? What happens in the tech sector is usually a precursor to what happens for the rest of the industry."