Monday, September 20, 2010
Internet Brands Brisco: Deal Will Allow More Focus On Long Term Growth
Los Angeles-based Internet Brands, which operates a suite of online, advertising driven websites across a wide range of verticals, said Monday that it would go private in a $640M, private equity deal, bucking the trend of Southern California companies filing to get to the public markets. Internet Brands had gone public just three years ago. In a blog post, Brisco said that the firm decided to become a private firm again, because it would be a "good deal" for shareholders, and also said it could become "even more focused" on long-term growth. The firm was originally known as CarsDirect, the automotive buying site of Idealab, and was headed by Scott Painter--who is now head of both Zag Automotive and TrueCar. The firm changed its name to Internet Brands in June of 2005, and hit the markets with its IPO in November of 2007. The firm's stock had held its own, having recovered so far from last year's market downturn.
The move is an interesting one, given the number of Southern California technology companies trying to go the other direction, and to hit the public markets. Currently, Los Angeles-based Demand Media, San Diego's Zogenix, City of Industry-based NewEgg, Los Angeles-based GameFly, San Diego-based Reva Medical, Westlake Village-based Inphi Corp, and Thousand Oaks-based Nexsan are among the local technology firms waiting to reach the public markets. That is on top of the many Southern California firms who have recently had a successful IPO, including Monrovia-based Green Dot, Beverly Hills-based RealD, San Diego-based MaxLinear, and Woodland Hills-based ReachLocal. Firms rumored to be somewhere among along the IPO process include Los Angeles-based Hulu, solar energy firm eSolar (also backed by Idealab), Irvine-based Fisker Automotive, and Los Angeles-based LegalZoom.
One clear advantage of going private, for Internet Brands, is that it will receive less scrutiny of its finances and merger and acquisitions; the firm, which has been a very aggressive acquirer of Internet domains and businesses, is seeing more competition from such firms as Demand Media and others, and going private will allow it to move more stealthily in its M&A activity.