Yesterday, Gerson Lehrman Group announced that it had reached an agreement with Silver Lake Partners, a leading private equity firm in the technology space. The agreement calls for Silver Lake to invest about $200 million in GLG. No other terms were disclosed in the press release.
According to the New York Times, the deal values GLG at $875 million. This would imply that Silver Lake has purchased just under 23% of the company. This would put the purchase at approximately 4 times revenue. On the other hand, if the ownership is 25% as was reported in the Times, and using the valuation figure quoted in the article, then Silver Lake would have invested around $219 million, slightly higher than reported in the GLG press release. We have also heard valuation numbers closer to $950 million, which would make GLG’s multiple slightly higher.
Gerson undoubtedly accepted this investment in an effort to recapitalize the business as some investors have held onto their investment for 4 to 5 years. However, we also suspect that Gerson was interested in bringing Silver Lake on as a partner in an effort to get advice and leadership as the firm positions itself for its next stage of growth.
While Gerson was initially known for its healthcare network, the firm has since branched out to cover about 10 practice areas including: Finance and Accounting; Consumer Goods and Services; Energy and Industrials; Financial and Busiiness Services; Healthcare; Legal, Economic and Regulatory Affairs; Real Estate; and Technology, Media and Telecom.
Other acquisitions in the expert network space include Standard & Poors’ purchase of Vista Research a few years ago and Guideline’s purchase of Intota. In addition, Anian (now Reuters Insight) is owned by Reuters, MEDACorp is owned by Leerink Swann, MCRI is owned by Summer Street, Nitron is owned by EvalueServe, profNet is owned by PRNewswire, Primary Insight is owned by Bear Stearns, and Vantage, LLC is owned by Goldman Sachs.
In fact, the only two major expert network providers that do not have significant dance partners at this point are Clinical Advisors and Coleman Research Group. However, we would not be surprised to see either of these firms try to find partners sometime in the coming year.
Press release below.
Gerson Lehrman Group Announces an Agreement on Approximately $200 Million Equity Investment from Silver Lake
NEW YORK, Dec. 19 /PRNewswire/ -- Gerson Lehrman Group (GLG), the leading technology-enabled marketplace for expertise, today announced it has reached a definitive agreement with Silver Lake, the leading investment firm focused on large scale investments in technology, technology-enabled and related growth industries, under which Silver Lake will make a capital investment of approximately $200 million in GLG. Additional terms of the agreement were not disclosed. Gerson Lehrman provides technology-enabled services to help financial services firms, professional services firms, law firms, nonprofits and corporations find, engage, and manage subject-matter experts. Its expert network is recruited, organized, administered, and accessed by clients through a sophisticated and proprietary technology platform. For the twelve months ended September 30, 2007, the company generated approximately $220 million in revenue and organic revenue growth of 31%. The company is headquartered in New York and maintains 12 offices throughout the United States, Europe and Asia. "We're excited about Silver Lake's deep experience in information and financial technology and the opportunity to work with their talented team of professionals," said Alexander Saint-Amand, Chief Executive Officer of GLG. "Our company's mission is to provide decision-makers in all industries around the world with unique technology and services to find, engage and manage experts. Silver Lake has a great track record of strengthening the global platforms of their portfolio companies and therefore is an ideal partner for GLG's growth and expansion in the coming years," said Mr. Saint-Amand. Michael Bingle, a Managing Director of Silver Lake, said, "Gerson Lehrman Group is an industry pioneer and clear leader in the rapidly growing global market for primary expertise. The company's web-based software, services, and scale provide a unique value proposition to both its clients and its deep base of experts, and we believe the company is very well-positioned for continued growth." Evercore Partners served as advisors to Gerson Lehrman Group in the transaction. The transaction is expected to close in January. About Gerson Lehrman Group Gerson Lehrman Group (GLG) provides technology and services to support a marketplace for expertise. Since 1998, its platform for consultation and collaboration has helped the world's leading financial services firms, consultancies, corporations, and nonprofits find, engage, and manage experts in a broad range of industries and disciplines. GLG's unparalleled network of the world's leading expert consultants, known as the GLG Councils, includes more than 175,000 subject-matter experts who educate and provide insight to decision-makers through a wide range of consulting methods, including telephone consultations, expert surveys and seminars. GLG has invested in one of the world's most sophisticated infrastructures for expert recruiting and compliance. For more information about GLG, please visit http://www.glgroup.com. About Silver Lake Silver Lake is the leading investment firm focused on large scale investments in technology, technology-enabled, and related growth industries. Silver Lake seeks to achieve superior financial returns by investing with the strategic and operating insights of an experienced industry participant. Silver Lake's mission is to function as a value-added partner to the management teams of the world's leading technology franchises. Its portfolio includes or has included technology industry leaders such as Ameritrade, Avago, Avaya, Business Objects, Flextronics, Gartner, Instinet, IPC Systems, MCI, NASDAQ, Network General, NXP, Sabre Holdings, Seagate Technology, Serena Software, SunGard Data Systems, Thomson and UGS. For more information, please visit http://www.silverlake.com. About Evercore Partners Evercore Partners is a leading investment banking boutique and investment company. Evercore's Advisory business counsels its clients on mergers, acquisitions, divestitures, restructurings and other strategic transactions. Evercore's Investment Management business manages private equity funds and traditional asset management services for sophisticated institutional investors. Evercore serves a diverse set of clients around the world from its offices in New York, Los Angeles, San Francisco, London, Mexico City and Monterrey, Mexico. More information about Evercore can be found on the firm's Web site at http://www.evercore.com.