Slideshow: M&A, IPOs Slump in Summer Slowdown

The summer slowdown continues in M&A while the IPO market turned in its worst week since January.

There were only seven new IPOs this week, totally $547.8 million, Thomson Reuters said. That’s the lowest since the week of January 22nd when six IPOs raised $224.7 million, TR said.

Global M&A produced one of its most lethargic weeks this year. There were 397 global announced transactions, valued at $27.3 billion. This compares to 678 transactions last week, totaling about $44.7 billion, TR said. The number of deals is the lowest all year, while deal value, which was bad, wasn’t the worst this year (that honor goes to the first week of 2012 when 588 deals totaled $14.9 billion), according to the data.

The biggest M&A deal comes from Russia where OAO Sberbank, the biggest lender in Eastern Europe, which acquired Denizbank, a Turkey bank for 6.47 billion liras ($3.54 billion). The seller was Dexia.

The private equity side was a curious mix. The number of deals was low but some large transactions helped boost deal value to its best since April. There were 38 announced transactions this week, valued at $6.4 billion. This compares to 60 deals, totaling $4.1 billion.

Here’s the top 5 PE deals.

[slideshow]

[slide title="5. AOD Software"]

Primus Capital announced yesterday it made a growth investment in AOD Software, which provides software for the long-term care industry.

Financial terms weren’t announced but Thomson Reuters is valuing the deal at $80 million.

Primus is a Cleveland PE firm.

[slide title="4. Future Capital Holdings"]

This week, Warburg Pincus agreed to buy a controlling stake in Future Capital Holdings for nearly $100 million.

Future Capital Holdings, of Mumbai, provides consumer and mortgage loans.

[slide title="3. FiberGate"]

The Zayo Group, which is backed by GTCR, is buying FiberGate. Financial terms weren’t announced but Thomson Reuters is valuing the deal at $117 million.

FiberGate is a Washington D.C. metro area provider of Dark Fiber services.

GTCR, in March, agreed to invest in Zayo to help finance the PE firm’s buy of AboveNet.

[slide title="2. Party City"]

This week, Thomas H. Lee Partners inked a deal to buy Party City for $2.69 billion. The sellers, Advent International Corp, Berkshire Partners LLC and Weston Presidio, will retain a minority stake, Reuters said.

[slide title="1. Chesapeake Midstream Partners"]

Today, Chesapeake Energy Corp. announced plans to sell its pipeline and related assets to Global Infrastructure Partners for more than $4 billion, Reuters said. Chesapeake is selling its limited partner units and general partner interests in Chesapeake Midstream Partners LP to infrastructure fund GIP for $2 billion.

The company also entered into an agreement with Chesapeake Midstream Partners to sell certain Mid-Continent gathering and processing assets. It has a letter agreement with Global Infrastructure Partners for the sale of its interests in wholly owned subsidiary Chesapeake Midstream Development LP. Chesapeake expects to raise more than $2 billion from the latter two transactions, Reuters said.

[/slideshow]


M&A Slows Down and for Some LPs This Isn’t So Bad

The lack of M&A is a concern to some LPs. And to others, it’s not–thanks in part to dividend recaps.

Last week, I reported that global M&A markets had produced one of its slowest weeks all year. There were just 419 announced mergers from May 27 to June 1, valued at $38.9 billion. The number of deals was the lowest so far in 2012, according to Thomson Reuters.

The decline has caused distributions to suffer, one LP says. Another says that the ratio of distributions to paid-in capital is way down.

“People have been surprised that M&A has been so slow this year,” the first LP says. The second half of 2012 is expected to be busier, says the exec, who hopes that distributions will improve with it.

Price expectations are out of whack, both LPs say. Last year, many PE firms sold some of their best companies at relatively high valuations, the first source says. Now PE firms are holding on to their assets, which could generate 2x – 2.25x invested capital if sold, in the hopes of getting 2.5x- 3x. “This is a big mistake,” the first LP says. Funds that could sell a company now for 2x should do it, the exec says. It isn’t worth holding on for another 1/2 turn, the LP says. “It’s not like you will go from 2x to 5x by waiting a year,” the source says.

Why the need to sell? “LPs are pretty full of PE and they need the distributions so they can do new funds,” the first source says.

But a third LP is reporting a wildly different experience these past few months. In May, the LP received about 45 distributions, or about 4.5% of the April 30 equity value of the firm’s portfolio. “If that kept up about 53% of our portfolio would be gone in a year,” the source says.

The third LP wouldn’t say how many of the distributions were generated from M&A. Most, though, weren’t recaps.

April was similarly fortuitous for this LP. The source received about 50 distributions. The third LP said that an “unusually large number” of them were recaps. “It’s nice as an equity investor to take money off the table without necessarily selling,” the source says.

Some GPs are doing recaps in the hopes of selling later, the third LP says. In at least one instance, a PE firm told this source they were looking to sell a company and that an auction process would likely take two to three quarters. So they decided to leverage the company and distribute the additional cash to investors. If the company does sell later this year, most of the proceeds would be used to repay debt, the LP says. “The company won’t produce much of an additional check to LPs,” the source says.

GPs, the source says, are acknowledging that a strong credit market is allowing them to recap companies. “We started to scratch our heads and wonder if lenders were getting much too aggressive,” the third LP says.

Cat photo courtesy of Shutterstock


Oracle to buy Collective Intellect

(Reuters) – Oracle Corp will buy Collective Intellect, which helps businesses to get information about consumers from Facebook and Twitter pages.

The terms of the deal were not disclosed.

The deal comes a day after Oracle’s rival Salesforce.com Inc agreed to buy Buddy Media, a social media marketing company.

Collective Intellect uses its web-based text mining and analytics software to help its customers to collect and process information from online consumer conversations and other available content.

Oracle last month announced plans to buy Vitrue, a cloud-based social marketing and engagement platform, for an undisclosed price. Industry website TechCrunch said the Vitrue deal was for $300 million.

Collective Intellect investors include Appian Ventures, Croghan Investments, Grotech Ventures and Crawley Hatfield Ventures.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Maju Samuel and Jonathan Marino)

Image Credit: Oracle


Oracle to buy Collective Intellect

(Reuters) – Oracle Corp will buy Collective Intellect, which helps businesses to get information about consumers from Facebook and Twitter pages.

The terms of the deal were not disclosed.

The deal comes a day after Oracle’s rival Salesforce.com Inc agreed to buy Buddy Media, a social media marketing company.

Collective Intellect uses its web-based text mining and analytics software to help its customers to collect and process information from online consumer conversations and other available content.

Oracle last month announced plans to buy Vitrue, a cloud-based social marketing and engagement platform, for an undisclosed price. Industry website TechCrunch said the Vitrue deal was for $300 million.

Collective Intellect investors include Appian Ventures, Croghan Investments, Grotech Ventures and Crawley Hatfield Ventures.

(Reporting by Supantha Mukherjee in Bangalore; Editing by Maju Samuel and Jonathan Marino)

Image Credit: Oracle


To Walk off with Cole Haan, Sponsors will Battle Strategics

There’s only one glass slipper, and a whole lot of pumpkins and lonely rides home. That’s the likely story to come out of the Cole Haan auction. Private equity firms should expect to take on a number of strategic bidders and sources are saying the multi-billion dollar auction of high-end shoe and luxury goods maker Cole Haan will likely be a crowded one.

Nike, which just announced plans to deal the popular shoe and leather brand, is moving deeper and deeper into sports merchandise—but don’t take that as a sign of weakness at Cole Haan, one source says.

It is unlikely Cole Haan will go at the highest end of the ebitda multiple range (12 times ebitda) similar to boot maker Timberland’s 2011 sale, one source said. That company was sold to VF Corp. in a $2 billion deal last year.

“You’re going to see some large cap PE firms emerge as bidders,” one source said.

Golden Gate Capital, which owns Rocket Dog, as well as Apax Partners, could be interested in Cole Haan, a banker says.

“It would be a great PE play,” that source says.

Bigger sponsors, such as Leonard Green, which teamed with TPG to take clothing retailer J. Crew private for $3 billion in a 2011 deal, is another potential buyer, one source suggested. Green, of course, just closed a $6 billion private equity fund and has as of late shown a penchant for taking on consumer plays, like Whole Foods and J. Crew. Still, at such a high price, even Green may have to partner with another sponsor once again.

Big strategic bidders are expected, too. Sources mentioned bidders like Labelux, the privately-run European group, and LVMH, the listed, France-based consumer goods conglomerate, as potential bidders Cole Haan. VF Corp. is another potential buyer for Cole Haan, a source said.

Lion Capital was also mentioned as a potential bidder, a source says, although one that would need to participate in a club deal to complete such a large transaction. Earlier this year, Lion Capital acquired the majority stake in fashion label John Varvatos.

peHUB’s Luisa Beltran contributed to this report.

Image Credit: Cole Haan


peHUB First Read

Flameout: Another solar bankruptcy

Here’s probably not the way to deal with a dispute with your wife. Finance guys, take heed.

Rich Get Richer: KKR gets mega-commitment for Asia fund

Are there still opportunities in biotech VC?

In Retrospect: That early Zynga exit was well-timed for the sellers, wasn’t it?

What’s Apple lacking?

It’s jubilee time, baby!

IPO Doghouse: There are some ugly babies next to Facebook in the delivery room…

More Market mess on the way?

Soros Sez–The EU has ’til September to come up with a cure

Cmonnnn Baaaaaaby: Let’s do the Twist

Will IPOs take an early vacation?

The Gender Gap: Betabeat breaks it down

Image Credit: Jonathan Marino


Slideshow: M&A Crawls During Holiday Week

Holiday weeks are typically slow for M&A and this one was no exception.

Deal valued dropped 50% while the number of transactions fell nearly 26%, according to preliminary data from Thomson Reuters. This week saw 419 announced global mergers totaling $38.9 billion, down from 566 transactions last week valued at $78.5 billion. My weekly caveat: Thomson Reuters numbers may change as more deals and details emerge.

The week’s top deal came from Japan’s Marubeni Corp., which agreed to buy Gavilon Holdings, a grains company in Nebraska, for about $3.6 billion.

Private equity-backed transactions were similarly low. There were 31 PE-backed global transactions, valued at roughly $2.2 billion. This is down by about half from last week when 62 transactions were valued at about $4.3 billion, TR said.

Here’s the week’s top PE deals, according to Thomson Reuters.

Photo courtesy of Shutterstock

[slideshow]

[slide title="5. The Hoxton Hotel"]

The week’s fifth largest deal comes from Ennismore Capital, a boutique investment firm in London, which bought Hoxton Hotel.

A price wasn’t disclosed. The Hoxton is a 208-bed hotel in London, according to BigHospitality. Bridges Ventures was a seller.

[slide title="4. Technicolor"]

Vector Capital made an offer to buy about 30% of Technicolor, a French digital video specialist, for up to 186 million Euros ($233 million). Vector said its offer was a “substantial improvement” over a rival bid from JPMorgan and One Equity Partners. But Technicolor’s board chose to back JP Morgan, which offered to inject up to €158m in exchange for a 29.96% stake.

[slide title="3. Prosper Trade"]

There’s not much information available on this next deal. Sunny Fortune Investments, a unit of Enerchina Holdings, has reportedly agreed to buy Proper Trade Investments and Welson East, of China. Wu Laam Anne is the seller.

Thomson Reuters, which says the deal is in the real estate sector, values the transaction at $310.9 million.

[slide title="2. Coking Coal Mine"]

Keystone Global is reportedly buying an unnamed coking coal mine that’s located across the states of West Virginia and Kentucky for $480 million.

Korea-based Keystone is principally engaged in the energy business.

[slide title="1. Interline Brands"]

The week’s biggest deal is the sale of Interline Brands to Goldman Sachs Capital Partners and P2 Capital Partners for about $1.1 billion.

Jacksonville, Fla.-based Interline is a distributor and direct marketer of maintenance, repair and operations products.

[/slideshow]


peHUB First Read

Kayak backing off its IPO post-Facebook?

Debt Isn’t Bad Enough, Apparently: Students now getting slapped with more fees

Wheelin’-Dealin’: Atlantic Broadband on the block

David Lonsdale pens a piece on PE

Some Soundgarden to start your morning? Don’t mind if I do.

Guitar legend Pete Cosey passes away

You Again? PE eyes Euro-sensor deal

Evil, but hilarious.

Not His Cup of St. Joe: Einhorn puts another victim in the crosshairs

Australian PE outstrips benchmark Australian stock index

Don’t Sue: if you’re a woman and if you want to win in venture

YC-backed GoCardless is a Bitly for online payments

Could be a joint bid for TPG and US Airways as they gun for AMR

Image Credit: Jonathan Marino


peHUB First Read

POTUS Choom: A partier’s guide to chillin’ with POTUS

Dewey & LeBoeuF-ed: Law firm files for bankruptcy

Pinterest is making friends

Raj has got some problems

How to Hype a Tech Scene

Here my Voice! Tech start-up shouts out for fundraising

Actis Singapore head leaves with no immediate plans for future

Big Brother is watching Talpa

Hot or Not? The art of raising seed

A Public Relations Disaster: Facebook’s perfect storm of an IPO

Moody’s warns on European LBO debt defaults

New York, New York! The ideal home for tech start-ups?

Image Credit: Jonathan Marino


peHUB First Read

Oh My: CVC plots mega fund for Europe

Is Sequoia going Brazilian?

Bad News that’s better than expected for Pandora

Zuck-Bucks!

Not So Fast: PF Chang investor tries to block deal

The Professor Speaks on Face-PLANT

Come on Over! NYSE pitches Facebook

Buzz words that have lost their edge

Oh Thank Heaven: Rickrolling isn’t going anywhere

What’s the Plan, Man? Levinsohn to bring new strategy to Yahoo!

In Case Google wasn’t having a good enough week, this happened.

Image Credit: Jonathan Marino


EMC’s Purchase of Cloud Storage Company Syncplicity Provides “Win” for True Ventures

Storage giant EMC has purchased cloud storage provider Syncplicity, providing a “win” for True Ventures, says Phil Black, who led led the investment for True.

The purchase price was undisclosed.

Black, a co-founder of True, said the firm was Syncplicity’s primary backer and invested nearly $7 million in the company, which was founded in November 2007. Black declined to reveal the return on the investment to True Ventures, but he told peHUB via email: “The good news here is that all shareholders are making good money. Founders, employees, friends and family and VC investor all can count this as a ‘win.’”

Syncplicity announced the acquisition on its blog in a post signed by co-founders Leonard Chung and Ondrej Hrebicek and CEO Karen White. The post says Syncplicity will be a “wholly owned subsidiary of EMC” and that the Syncplicity team “remains intact” and will be part of EMC’s Information Intelligence Group.

The trio also wrote: ”We’d like to take this opportunity to thank our investor, True Ventures, for being a vital part of our journey and success. Their spirit of entrepreneurship, community of founders, endless support and unique thought leadership has been an inspiration.”

Image credit: Cloud computing concept photo by ShutterStock


Resume Fraud: How We Can Learn from the Yahoos of the World

Scott Thompson is not the first and unfortunately he will not be the last. Lying or exaggerating accomplishments is a parlor trick older than the combined age of the board of Yahoo! To avoid being fooled, you must know where to go to debunk the fibs and frauds that appear on resumes and CVs.

Let’s go back to Scott Thompson. As you all know by now, the biography for Thompson (who unfortunately just announced he has thyroid cancer) on file with the SEC states he has a bachelor’s degree in accounting and computer science however it was determined by Dan Loeb, the activist investor with impressive due diligence skills, that Thompson’s degree was actually only in accounting and that computer science, as a major, was not offered at Thompson’s alma mater until after he left. Having run a premiere background check organization for over 20 years, let me tell you this is an extremely common type of embellishment.

In our own case history of conducting background checks on management teams, we have seen everything from stark resume fraud (an MBA from Harvard that never existed; employment at a large company that has no record of the individual’s name or Social Security number) to nuanced exaggerations (licensed Certified Public Accountant in one of the three states listed on the resume; got the degree from Cornell but did not graduate magna cum laude as listed on the bio). Once you know where the fraud exists, it is easier to know how to uncover it.

To confirm education credentials (everything from matriculation to graduation in both undergraduate and graduate programs), most colleges and universities have handed their records to National Student Clearinghouse (a third-party) to deal with verifications. National Student Clearinghouse has an easy website that guides you through the degree verification process. Some schools still retain their records and a simple call to the registrar of the school should yield results however some schools do require a signed release in order to verify any enrollment or degrees. And, confirming professional accreditations, such as Certified Public Accountant (CPA) or Chartered Financial Analyst (CFA), is just as important as these accomplishments are often misrepresented as well. CPA certifications can be confirmed by the individual state that licenses accountants and the CFA Institute maintains records of all CFA designations.

But confirming (or denying) these representations on a resume or CV is just the beginning of the necessary steps in a comprehensive background check. To ensure there are no underlying risks associated with hiring or investing in C-suite execs, a background check should also include reviewing criminal records, regulatory actions, civil lawsuits, bankruptcy filings, corporate records and media articles. It is also quite useful to contact former employees of the company and references and business associates of the executives to yield more information that may not necessarily be in the public domain; e.g. a former employee might have been exposed to sexual harassment but never actually filed a lawsuit.

Using creative search strategies and thorough information analysis when searching these public record documents, background checks ensure you will know about any issues an executive is involved in that may impact your deal such as being sued by former investors or partners; maintaining multiple business interests that would conflict with your interests; articles or social networking sites that are inflammatory or problematic; or, a criminal past that questions the integrity of the executive (like when we uncovered a few founders of a tech firm spent time behind bars for running a national drug ring).

Being informed is crucial and background checks are the easiest and most comprehensive means to this end. The information unearthed in a background check may not necessarily kill a deal but it will give you leverage and understanding before moving forward so you can properly assess the risks. And, in light of the Scott Thompson/Yahoo! scandal, who doesn’t want to be a little more prepared?

Joelle Scott is the Director of Business Intelligence for Corporate Resolutions Inc. Opinions expressed here are entirely her own.

Image Credit: Shutterstock.com


peHUB First Read

You Need to Keep up in a Town Like This: Google gets the upgrade in NYC

Question from Om: Why can Quora get 50-mil?

Not Again: We’ve executed an innocent man. We, as a nation.

Who’s the BMOC on social media?

Now here’s something the taxpayer can afford to support

On the Fence: Where are Americans on gay marriage?

What’s student debt going to do the economy? (Editor’s note: Will it be as bad as what dumb people do to the economy?)

Can Facebook boost its mobile base?

How Flikr blew it

So what’s to like about Jamie Dimon?

Livin’ in a Hacker’s Paradise: Facebook HQ slideshow

The AIC Black & Blue album is so much better than it deserves to be. Enjoy your Wednesday.

Image Credit: Jonathan Marino


Deutsche Bank Calls off Talks to Sell Most of Fund Units to Guggenheim

Deutsche Bank has decided against selling three of four fund units to Guggenheim Partners, which could put the businesses back in play.

New York-based Guggenheim, a financial services firm with $125 billion in assets under management, was in talks to buy four asset management units from Deutsche bank. Guggenheim is now only in negotiations to buy RREEF, its global alternative asset management business, DB said today. Guggenheim is no longer in discussions to buy the three other DB fund units that were on the block .

“The Bank and Guggenheim Partners mutually agreed to end exclusive negotiations about a potential sale of DWS Americas, the mutual fund business in the Americas; DB Advisors, the global institutional asset management business; and Deutsche Insurance Asset Management, the global insurance asset management business,” Deutsche Bank said in a statement Friday.

Reuters is reporting that talks broke down after the German lender withdrew an offer to guarantee the unit’s revenue. This caused Guggenheim to lower the price it would pay for units, the story says. Reuters says its unclear if Guggenheim and DB will be able to reach a deal even for RREEF. Deutsche Bank asset management has $721 billion AUM as of March 30, a spokeswoman says, while RREEF has $63 billion AUM.

In February, DB announced it had entered exclusive talks to sell the four fund units to Guggenheim. The deal included DWS Americas, DB Advisors, Deutsche Insurance Asset Management and RREEF. Guggenheim, at the time, beat out Macquarie Group, which was also vying for the businesses, peHUB has reported.

It’s not clear whether DWS Americas, DB Advisors and Deutsche Insurance Asset Management are back on the block. DB said it continues to evaluate the units. But a source pointed to a March announcement from DB where the bank unveiled a newly integrated wealth management unit.  ”Some of these businesses might form an integral part of that division,” a source says. This means that DB could be choosing to keep the fund units it planned on selling. Deutsche Bank refused to comment.

Why do we care about this deal? Private equity, including Hellman & Friedman and Conning & Co. (which is owned by PE firm Aquiline Capital Partners), along with strategics (BlackRock, PIMCO) were expected to be interested in DB’s fund businesses. But Reuters said DB had a hard time selling the fund units. Deutsche Bank reportedly wanted to sell off the business as a whole and was seeking $2 billion. However, press reports said the unit would likely fetch about $1.2 billion.

Artwork courtesy of Shutterstock


peHUB First Read

Blackstone may have to sacrifice fee revenue to win CalPERS pledge

Micron in talks to acquire ailing Japanese chipmaker Elpida

The anti-Facebook is getting bought and will be shut down

BlackBerry 7 gets the green light in the Pentagon

Bad News for Traditional Retailers: Amazon moves into high fashion

Goodbye Euro: Greece has left the Eurozone

Trust Me: eEye gets internal controls for its external security

Did you know? One in three young Americans are unemployed

Take it to the East: Evernote makes the move with a standalone Chinese service

It’s virtual desktop tech that Citrix is acquiring

This is My eBay Moment: Can Etsy make the most of it?

Image Credit: Jonathan Marino


peHUB’s Top 10 Posts of the Week

Stunningly, our readers weren’t most intrigued by Carlyle on its big IPO week (maybe they weren’t buying in)–instead, readers wanted to know more about KKR, which other IPOs have had some pop, and how VCs are heading back to school. Here’s the Hub’s hit list:

1. Reuters takes the cake this week, breaking down KKR’s suffering on fees

2. Alastair Goldfisher and Venture Capital Journal explores how—and why—VCs are heading back to school–for deals!

3. Luisa Beltran explains how FT Partners were also big winners on the AmWINS deal

4. The biggest private equity deal in the restaurant space, Centerbridge’s buy of PF Chang’s, makes for a good headline (and a good bite)

5. Connie Loizos inspects just how troubled Groupon truly is—and, why analysts can’t seem to agree

6. Buyouts’ Steve Bills asks how the Chesapeake troubles could impact KKR

7. Buyouts’ Gregory Roth reports on another pension looking at making some PE commitments—Florida’s!

8. Mark Boslet keeps track of early-stage bets being made in VC by UTIMCO

9. Jonathan Marino sounds off on some of the IPOs with the most pop, as we await the Facebook offering

10. Mark Boslet covers Foursquare biz dev whiz Tristan Walker’s trip to Andreessen Horowitz, where he’ll be an EIR

Image Credit: Shutterstock.com


More Evidence Of The Rising Interest In Corporate Venturing And M&A

I’m not the first to observe that corporations, particularly those connected to technology, are ramping up their investment and M&A programs.

But here is more evidence of the trend and some naming of names. I stopped by the Plug and Play Tech Center on Thursday afternoon for a program on corporate venture, and one company after another claimed their efforts were on the rise.

Included on the list were Salesforce.com, Adobe Systems and Cisco Systems. Even Johnson & Johnson talked about its efforts to fuel innovation and potentially pull the most attractive companies in house.

The reason is obvious. Technological progress in social, mobile, e-commerce and elsewhere is moving along a rapid clip and corporations don’t want to be left behind.

So what are they looking for? Strategic fit is one thing. The management and technical team is another.

At Salesforce.com, activity is on the rise, says Avanish Sahai, a company vice president. The company has become more involved on the M&A and investment fronts with the goal of accelerating innovation, he said.

Adobe, too, has a more active pace when there is a strategic fit with the startup, said Kristina Omari, a vice president of corporate development (pictured).

This fit is of particular interest when it involves digital media and digital market, she said. Still, the software developer does only a handful of investments each year.

For its part, Cisco has clearly become more focused over the past two to five years, offered Zeeshan Najmuddin, head of global architecture programs. In M&A, where Cisco has long been aggressive, cross-function teams work at integration.

With investing, “I would say there is more science behind it” than before, says Najmuddin.

Finding technology to bring in house is a key motivation for Johnson & Johnson. “We’re obviously trying to invest in order to acquire some of these companies,” says Rami Elghandour, a principal for venture investments.

Photo taken by Mark Boslet

Disclosure: Mark Boslet owns shares of Cisco Systems


SlideShare Sale is a Big Win for Venrock, Sees Return Of More Than 15x

SlideShare sold to LinkedIn today in a deal valued at $118.75 million, producing a return of more than 15x for the startup’s sole venture backer – Venrock Associates.

SlideShare raised a seed round of $300,000 in January 2008 from Ariel Poler, Hal Varian, Yee Lee, Jonathan Abrams, Saul Klein and Mark Cuban, according to CrunchBase. Venrock then invested $2.7 million in a Series A two months later, CrunchBase reports.

Venrock will see a return of more than 15x on its investment after just four years, says Brian Ascher, a Venrock partner who sits on SlideShare’s board. The investment was made from Venrock’s fund V.

Venrock’s investment in SlideShare was made by former Partner David Siminoff and former Vice President Dev Khare. (Siminoff is now “chief creative officer” of Shmoop, an educational website he co-founded, and Khare is a principal in the India office of Lightspeed Ventures.)

Ascher said the credit for the successful outcome goes to SlideShare’s founders, CEO Rashmi Sinha, CTO Jonathan Boutelle, and COO Amit Ranjan. “If you invest in a team that is very capital efficient and very focused on building a profitable company, you can do it in a way where neither party is significantly diluted — and outcomes in this range make everyone happy,” Ascher says.

The SlideShare team kept costs low by doing development in India, not spending money on their own hosting infrastructure and by focusing on viral growth instead of spending money on marketing, he says.

The company, founded in October 2006, nearly reached break-even in 2010 and was “solidly profitable” as of last year, Ascher says. “They were able to turn profitable because they focused on keeping costs down and making sure they had a real revenue model based on advertising and subscriptions.”

Another takeaway from the successful exit was that it “proves again that oftentimes being close to a strategic partner is a likely path to an exit,” Ascher says. SlideShare is a featured application on the LinkedIn platform.

San Francisco-based SlideShare allows people to share PowerPoint presentations and other documents online. It says that it is the world’s largest community for sharing presentations, with 60 million monthly visitors and 130 million page views. The service fits very naturally with LinkedIn, a business network. “Rashmi [Sinha, the company's CEO] described it as photos are for Facebook,” Ascher says. “That really captures the potential here.”

LinkedIn said in a statement that it is paying for SlideShare with 45% cash and 55% stock. The deal is expected to close in the current quarter.

“Presentations are one of the main ways in which professionals capture and share their experiences and knowledge, which in turn helps shape their professional identity,” LinkedIn CEO Jeff Weiner said in a press release. “These presentations also enable professionals to discover new connections and gain the insights they need to become more productive and successful in their careers, aligning perfectly with LinkedIn’s mission and helping us deliver even more value for our members.”

Image credit: Presentation concept photo courtesy of ShutterStock

 


peHUB First Read

President Obama pays Kabul a visit

Data Journalism: How it’s done

Can’t Get Enough of Colombian Hookers? That’s OK; neither can the US Secret Service

Shame for the Romney campaign

Here’s the PE Reader’s take on the industry

If Asia is in, is Europe out?

Actis to buy government’s stake in business

Partners Group says yes to Chinese fashion as Navis bows out

Francisco Partners takes Kewill private

ATMs that give you money for old broken phones?

What is going on with Pep Boys?

Facebook still not making the big bucks in mobile but driving the traffic to others

A newcomer Connects to Euro VC in London

Image Credit: Jonathan Marino