Paid for potential

Expanding its operations into US markets, UK media giant Guardian News & Media – publisher of The Observer and The Guardian – picked up B2B blog network ContentNext Media earlier this month. Founded in 2002, ContentNext is the creation of ex-Silicon Alley Reporter managing editor and business journalist Rafat Ali. Its ad-supported online network includes the content-centric blog,, and the UK version of paidContent.

We understand that ContentNext, which now employs 23 people, sold for around $30m, and we estimate the company was running at $4m in trailing revenue. For financial advice, ContentNext tapped Mark Patricof, managing director at MESA (Media & Entertainment Strategy Advisors), marking MESA’s third M&A advisory in online media this year. To date, ContentNext has kept its finances in the family. In 2006, the blog network raised its first and only round of financing, for less than $1m. Interestingly, its first and only investor also happens to be private equity patriarch Alan Patricof through his VC outfit Greycroft Partners.

Still, a 7.5x trailing revenue multiple had us scratching our heads at first, especially considering that the content network fetches only one million page views per month. But, looking closer, we see the deal being more about future potential and figure that an additional earnout is likely. In addition to a larger geographic reach for both publications (ContentNext will continue to operate independently), potential revenue from conferences also drove the deal. Further, ContentNext was not out shopping itself, but looking for a second round of funding, and we understand the deal was very ‘friends and family’ in nature. Judging from laudatory comments Rafat Ali and Simon Waldman, director of digital publishing, make about each other online, this certainly seems to be the case.