Great Hill reaps 6x return on sale of ZoomInfo

Great Hill Partners, which has deployed more than half its 2017 Fund VI, scored an about 6x return on its sale of B2B software provider ZoomInfo, sources told Buyouts.

Great Hill on Feb. 4 said it sold ZoomInfo to DiscoverOrg. Sources pegged the price at about $800 million.

Great Hill initially bought the company for $240 million in August 2017, financing the deal with $80 million in equity and the rest in debt, sources said.

The firm received nearly $480 million in equity back from the sale, sources told BuyoutsDebtwire earlier reported on the deal .

ZoomInfo represented an unusually short hold for Great Hill and the firm was not looking to exit, Chris Gaffney, co-founder and managing partner, said.

“We were approached; this was a little bit early. But the buyer was strategic, and the buyer offered a strategic value,” Gaffney said.

Great Hill’s ZoomInfo investment came from Fund VI, which closed on $1.5 billion in January 2017.

ZoomInfo combines data on user behavior, business data and artificial intelligence to streamline sales workflow and deliver revenue results.

During the hold, Great Hill doubled the company’s monthly growth rate, mainly through product development, Gaffney said. The median growth of Great Hill’s portfolio in 2018 was 28 percent, he added.

Great Hill also expanded ZoomInfo’s platform by adding on the San Mateo, California, startup Datanyze, which uses machine learning and proprietary methodologies to assess the technology decisions that millions of companies worldwide are making. This data enables users of Datanyze to efficiently identify companies that might want to buy the technology that those users are selling.

ZoomInfo acquired Datanyze in September 2018.

The company also expanded its geographical footprint by acquiring Y Labs of Ra’anana, Israel.

Post-acquisitions, ZoomInfo increased to six major locations including an expanded headquarters in Waltham, Massachusetts, and satellite offices in San Mateo, Grand Rapids, Michigan, St Petersburg, Russia, Kazan, Russia, and Ra’anana.

The firm also put together a succession plan for ZoomInfo’s founder, Yonatan Stern, who was set to leave the company in June 2018. In July, Great Hill appointed Derek Schoettle ZoomInfo’s CEO and a director.

Schoettle joined ZoomInfo from IBM, where he was chief business officer and general manager of the Watson and cloud platform business.

Great Hill will likely make six more investments out of Fund VI, sources familiar with the situation told Buyouts.

The firm is eyeing opportunities across fintech, healthcare, IT, and internet infrastructure, among other themes.

Within tech, Great Hill is focusing on mission cloud service, the e-commerce space with strong direct-to-consumer marketing practice, and in integrated payments, sources said.

Correction: This report provided an incorrect amount for Great Hill’s sixth fund, which closed on $1.5 bln. The report has been updated.

Action Item: Contact Great Hill in Boston: +1 617-790-9400.