In the LBO world, one sign of an economic turnaround is the return of strategic buyers to the buy side of the table. Veronis Suhler Stevenson is the latest to join the growing list of buyout shops that are once again selling to strategic companies, instead of flipping the company over to another buyout shop.
Terms were not disclosed in a transaction that hands over the financial data arm of Media General to Veronis and CenterPoint Data. CenterPoint is a financial data provider created by Veronis and four financial information industry professionals.
Scott Troeller, a general partner with Veronis, said the firm used VS&A Communication Partners III LP, a $1 billion fund closed in 1999, for the equity portion of the deal. The debt providers were undisclosed.
Based in Richmond, Va., Media General Financial Services (MGFS) was formed in 1969 by Media General as a newspaper, and over the years evolved into an online data provider. The company carries fundamental and technical information on more than 12,000 U.S. and Canadian publicly-traded companies spanning 200 industry groups. Clients include Microsoft Moneycentral (a division of Microsoft), Intuit, Hoover’s Inc., Smartmoney.com and Pinnacor Inc.
“We’re the guys that sell flour to the bakeries,” said Merle Yoder, executive vice president of sales and marketing with CenterPoint. “We sell to firms that run Web sites that provide fundamental financial data.” Yoder says the CenterPoint will inherit a two-person sales force in Richmond, and plans to expand with a sales office in New York.
According to Media General spokeswoman Lou Ann Nabhan, MGFS earned $5 million in revenue in 2002. “The mission of the company changed with technology and the times,” she said. “Media General is more focused on our core strength-local journalism. [MGFS] is not part of our core anymore.”
CenterPoint had an edge when dealing with Media General, in that Ponvert had worked for MGFS in the early 1990s, and was familiar with the company and its database. “We pitched the idea to a few private equity firms, but quickly came to the conclusion Veronis fully understands the financial services business, and they were more receptive to the idea of finding more acquisitions down the road,” said Yoder.
CenterPoint’s founders all have at least 20 years experience in the financial services business, according to Yoder. He most recently served with FactSet Research Systems Inc., while John Delta came over from nasdaq.com’s Web-based e-commerce unit. The remaining founders, Erich Eiselt and Renny Ponvert, both spent time with Thomson Corp., the parent company of Thomson Financial, which owns Venture Economics, the publisher of Buyouts.
“This is an incredibly fragmented market,” said Troeller. There are several large, vertically integrated firms such as Rueters, Bloomberg and Thomson, but there are many smaller, independent firms that service specific niches, and that presents an opportunity to build an independent company not tied to the vertically-oriented chains.”
In planning for add-ons, CenterPoint has identified the need to pursue the collection of financial information on a global basis. “The ultimate goal is to have all this fundamental data on a truly international basis. Currently, we have all of North America, and will be launching all of Latin America and the U.K. in the first quarter [of next year].
According to a report published by Veronis and PQ Media Veronis Suhler Stevenson Communications Industry Forecast, aggregate spending on business information services grew 1.9% in 2002 to $48.1 billion, from $47.2 billion in 2001. The forecast predicts overall spending growth in the business information services market to advance at a 5.7% compounded annual rate in the 2002-2007 period.