Industry Sources Say Cygnus on the Block
Owned by Westport, Connecticut-based CommerceConnect Media, a company formed by Mackler and Abry Partners, Cygnus has 65 magazines, 70 Web sites, 45 events and 2005 revenue of about $117 million, according to Folio: archives. Abry founding partner Royce Yudkoff also could not be reached for comment. Abry and Mackler purchased Cygnus for $275 million in 2000 from Gerry Hogan, Blair Schmidt-Fellner and Kelso & Company. Abry and Cygnus have retained Credit Suisse First Boston to handle the sale, with New York-based DeSilva & Phillips advising. Current earnings were not disclosed, however a back-of-envelope calculation on revenues of $117 million at an estimated 25 percent profit margin yields about $30 million. At a not unreasonable ten-times EBITA multiple, the company could get $300 million. Abry also owns Penton Media, which may be put on the block sometime over the next 12 months.
The news comes after several years of growth at Cygnus. Named to this year’s Folio: 40, Mackler said in April that Cygnus has grown since 1999 at a compounded annual rate of 7 percent. Also, the size of the company has grown from 425 employees to over 600, and it has completed 15 acquisitions since 2000, accounting for 49 properties. Of roughly 200 properties across 15 markets, 82 percent of them are either number-one or number-two, Mackler said in April.
Drew Lawler, founder of Newport Beach, California-based M&A advisory firm AJ Lawler Partners, said, "I don’t think they’re going to find a traditional publisher to buy them, and a private equity firm won’t buy because they’re already owned by one of the biggest. I think they’ll find a non-traditional financial entity to buy it. Kind of like the Citigroup deal with Network Communications."
However, one source advises not to count private equity players out. "The private equity buyers in the market are a major force and are the ones buying up the larger platform companies." The deal is expected to close within the next several months.