VSS Vaults Into A Web Site Deal

Target: Vault.com Inc.
Price: Undisclosed
Sponsor: Veronis Suhler Stevenson
Seller: Vault.com Inc.
Legal Advisor: Sponsor: Proskauer Rose LLP, Seller: Black & Associates; Hughes Hubbard & Reed LLP

Veronis Suhler Stevenson has acquired a majority stake in Vault.com Inc., which provides online information on undergraduate and graduate programs, job listings, company reviews and message boards highlighting more than 30 industries.

The deal was valued between $60 million and $85 million. Vault.com Inc.’s three founders all rolled over a chunk of their proceeds for an ownership stake, as did some other key employees, VSS Managing Director Trent Hickman said. Vault.com’s new CEO, Erik Sorenson, the former president of MSNBC, also invested in the deal, which Hickman said is typical for a VSS transaction. Rounding out the pool of investors is Ledgemont Capital, a boutique merchant bank. The site’s founders and senior managers will remain part of the management team.

VSS, which specializes in the media, communications, education and information industries, paid for the deal using capital from the $1.3 billion VSS Communications Partners III LP. The liquidity flowed to the company’s founders and shareholders, including American Lawyer Media, Ingram Book Group and Dun and Bradstreet. “The company’s very profitable on both an EBITDA and a cash flow basis,”Hickman said. Growth capital will come from the company’s earnings, which have been growing between 30 percent and 50 percent annually for the last four years, he added.

Known for building companies through roll-ups, VSS has already developed a target list of Vault.com add-on acquisitions to be gobbled up over the next four to five years. Going forward, VSS plans to integrate more video content onto the site in the form of video resumes, career development workshops and interview scenarios.

As VSS was pursuing the deal, Sorenson was also feeling out Vault.com. Sorenson had once worked for Eric Ober, Vault.com Inc.’s outgoing chairman and a former president of CBS News, who suggested that Sorenson think about coming aboard. As the deal progressed, VSS principals met with Sorenson, and they decided to go forward together. The deal allows VSS to appoint three of the five seats on the company’s new board of directors.

VSS had been courting the Web site for more than a year. In fact, Hickman remembers hearing the buzz about Vault.com and its warts-and-all reviews of investment banks and other financial firms while he was an MBA student at The Wharton School in the 1990s.

Capitalizing on that buzz, Vault.com’s founders were able to strike a balance in terms of revenue sources, with advertising dollars coming from employers looking to hire top talent; subscription dollars from students and young professionals searching for jobs; and subscription dollars from universities, which want to keep track of the recruiting process. “Virtually all the top law schools, top business schools and top universities in the country subscribe to the site,” Hickman said. It currently has between 40,000 and 50,000 individual paid subscribers, not including institutional and corporate subscriptions.—J.P.