UPDATE: Final Bids Said to be Due in Sale of Entrepreneur Media

Source: Elevation drops out; morale low, staff ‘in the dark.’

By Tony Silber
05/02/2008

The sale of Entrepreneur Media may happen as soon as the middle of May, perhaps as early as the 8th, a source familiar with the company told FOLIO: this week.

The source, who is not directly connected to the sale but well informed, said that the process, which started in early February, now includes the financial-services firm A.G. Edwards among the potential buyers, as well as Dow Jones, R.H. Donnelley and possibly USA Today, thus adding to, and perhaps confirming, some of the names mentioned in a recent report on paidcontent.org.

Final bids are said to be due next week.

Entrepreneur Media is said to want $200 million for the company. If that's true, then the multiple would be more than three-times revenue, because Entrepreneur Media is about a $60 million company.

Another potential bidder, Elevation Partners, has bowed out, our source says, but that at least one private equity firm remains in the mix.

Entrepreneur Media president Neil Perlman declined to even acknowledge that a sale is in the works or imminent. “We are looking for private equity funding for acquisitions to accelerate our growth,” he said. “ A sale may not be imminent.” Perlman also said that none of the companies named by FOLIO:’s source are in the mix, and the Elevation Partners never was.

In the meantime, the source said, morale is low at Entrepreneur Media as the staff remains in the dark on the sale process. In the past couple of months, two key employees, business development chief Chuck Fuller and editorial director Rieva Lesonsky, have left the company. Both were longtime strategic decision-makers, with a combined 49 years at Entrepreneur Media.

Perlman said morale is not low, and that the company is performing strongly, with first-quarter ad revenue up by 15 percent over the same period in 2007. He said that Fuller left for a better job and Lesonsky “decided to follow her own advice and has started her own company.”

[EDITOR'S NOTE: This story has been updated to include Perlman's comments.]

COMMENTS: 4

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Question about the numbers?

Submitted by Anonymous on Sat, 05/03/2008 - 02:47.

Is that $60 million a year in revs? Doesn't 3X sound low?

Revenue multiple

Submitted by Tony on Sun, 05/04/2008 - 12:05.

Hey--3x REVENUE is generally considered high, but multiples are almost always based on EBITDA, not revenue, and the revenue multiple is almost always backed into based on the EBITDA multiple. In effect, it's another, but subordinate, point of reference.

200MM = more than 10X EBITDA

Submitted by Anonymous on Sun, 05/04/2008 - 13:15.

I can't image that with 60MM in revenue the EBITDA of this company is more than 10MM-15MM. Even at the 15MM number it's still more than 10X, which on the face of it sounds really, really high (200MM). But there is a lot of cash on the sidelines and the brand is pretty good so who knows.

Executive exits, low staff morale

Submitted by Scott on Mon, 05/05/2008 - 13:20.

Isn't anyone wondering why so many execs are suddenly running for the exits? Bidders have to be at least a little spooked by why the "brains" of the company are now leaving. Are they being forced out, and if so, why now when it's so important to have the top people in place for a new owner? Or do they know something bad is about to happen, and they're trying to get out before it does?