Nearly all of the equity, or $388 million, is coming from Apax, sister website peHUB reported. This means the firm’s investment is roughly 43 percent of the total value of the deal, which is higher than the typical 28 percent to 30 percent usually put in by buyout firms these days.
Apax will own 91 percent of the parent company while Answers’ founders, management and employees will have the rest, Moody’s said. Apax’s investment is coming from its eighth buyout fund, which closed at $7.5 billion last year. Apax VIII LP, a young fund, is generating a negative 5.78 percent net IRR and a 1x total value multiple, according to performance data from the Washington State Investment Board.
“Apax is excited to be part of the combined company,” Answers CEO David Karandish said in an emailed response to questions.
St. Louis-based Answers, which calls itself the “world’s leading Q&A resource,” was founded in 1998. The company, which provides a Q&A website as well as cloud-based services such as customer experience analytics and content syndication, employs just fewer than 600 people. Sales are expected to be more than $200 million this year, Karandish previously told peHUB.
Large equity checks aren’t unusual for Apax. The London buyout shop invested nearly 70 percent equity in TriZetto Corp in 2008. Earlier in September, Apax said it was selling the provider of healthcare IT services to Cognizant Technology Solutions Corp for $2.7 billion. Apax stands to make nearly 3x its money with the TriZetto sale, peHUB has reported.
Apax also acquired BankRate in 2009 and invested $571 million in an all-equity, take-private deal, Dow Jones LBO Wire reported. Apax ended up investing in the low $600 million range by 2011 when the personal finance website went public. At that time, Apax was on track to double its money, the story said.
Executives at Apax declined comment.
Luisa Beltran is a senior writer for peHUB.