IDG Goes on the Block
Retains Goldman Sachs to explore “strategic options.”
“Upon the passing of Pat McGovern—IDG's founder—nearly two years ago, IDG's ownership transferred to the McGovern Estate for the benefit of the McGovern Foundation,” says a spokesperson in an email message to Folio:. “As we've announced to IDG employees, in response to certain operating requirements of the Foundation, IDG’s Board of Directors has retained Goldman Sachs to map out the company’s strategic options moving forward. Our goal is to determine the optimal future balance between what’s best for IDG and Pat McGovern’s mission for the Foundation.”
McGovern started the company in 1964 and over the next 50 years, IDG launched more than 300 magazines and newspapers, grew its digital footprint to 460 websites and produced more than 700 events worldwide.
The company, which publishes tech brands such as PC World, Computerworld and CIO, was also one of the first to proactively begin shutting down print brands to focus on digital, live events and marketing services.
Its last print magazine, CIO, was shut down last October and went digital only. The company still maintains print magazines in several international markets.
One source says the company is “very serious” about a sale and is potentially already beyond the “strategic options” stage.
Update: Another source says the process has just begun—bids are still another 3-6 months away.
“The biggest surprise is the timing, not the fact that the company is up for sale,” says the first source. “It’s not a lot of time when you think of getting a company like IDG ready for a sale.”
Considering IDG’s fiscal year ends in September, there’s been even less than two operational years since the passing of McGovern, indicating the balance is tipping toward the Foundation—which founded the McGovern Institute for Brain Research at MIT—and not running an international media company in a very challenging market.
A January announcement could indicate a desire to reach a sale agreement by the end of the current fiscal year.
Reports say IDG’s revenues approach $4 billion, but sources say they’re not that high.
Update: The second source says revenues are more like $1 billion with EBITDA at $100 million, and points out, as have others, that the pumped-up numbers the company reports are internally referred to as "Pat Math."
An IDG spokesperson declined to provide revenue figures.
The preference is for a single buyer, but IDG is a complicated company. Divisions include the research group IDC and IDG Ventures, plus entities around the world. It’s unclear if IDG Ventures would be part of the deal, but there’s very little overlap between IDC and IDG, suggesting the two could be broken up fairly easily.
Even if the media and research entities are separated, that doesn’t leave very many strategic buyer prospects for a company that size.
Update: The sources say that the estate prefers to sell the company in one piece. Breaking it up would result in an undesirably lengthy sales process. If sold in one piece, the buyer would likely be private equity.
One potential bidder is Nikkei, which already has a licensing partnership with IDG. Nikkei also just bought the Financial Times from Pearson last summer for $1.3 billion.
The first source adds that IDG has already done much of the work to trim expenses and shut down underperforming units and brands.