Behind Cygnus Business Media’s Dramatic Shift in Direction
Cygnus Business Media’s dramatic turnaround over the last two weeks hinged on the need for a new direction and an opportunity to achieve a better return in a divestment, according to sources familiar with the company’s decisions. The company announced on August 7 that it was not for sale and that it was changing CEOs.
In an unusual move, Cygnus owner ABRY Partners, a Boston-based private-equity firm, appointed co-CEOs, Carr Davis and Anthony O’Brien. The pair launched FDCH e-Media, which specialized in b-to-b partnerships and online news delivery, in 1993. In their roles as dual CEOs, Davis will handle sales and partnerships and O’Brien will manage company operations, personnel and technology development.
Davis and O’Brien replace Paul Mackler, who acquired the company with ABRY in 2000 for $275 million. ABRY managing partner Peggy Koenig put the change in direction this way: "After a good six years a CEO wants to take on new challenges, and a company needs a new set of eyes;in this case two pairs of eyes;and a fresh perspective. We mutually agreed it was time for both at Cygnus."
Koenig said ABRY chose Davis and O’Brien because of their experience in technology and content management. "The way we have come to think about Cygnus, like other b-to-b companies, is as a content company distributing content through multiple channels," she added. "The opportunity is to take content and distribute it to consumers in the way the consumer wants to receive it. This is right up their alley and is the way we think you need to grow a b-to-b company."
Interestingly, the selection of Davis and O’Brien is reminiscent of the dot-com boom years of 1999 and 2000, when "Internet DNA" for top executives was in tremendous demand.
Meanwhile, ABRY never officially said that Cygnus was on the block, although a spokeswoman later confirmed that it was not, which led observers to think it was taken off the block. An informed source, however, said the company did indeed explore its options and decided not to go forward with a sale for the moment because it had mapped out a "very achievable" growth plan. If that is executed, then the return on a sale at a later date would be better than it would be now. Cygnus generated about $120 million last year.