The minority shareholders of Forbes Media would be paid first if the company is sold, reports Dan Primack of Fortune.
Primack writes, “Back in 2006, a private equity firm called Elevation Partners — whose partners include rock star Bono and former Apple exec Fred Anderson — acquired a minority stake in Forbes’ digital operations (the online and offline operations were merged in 2009). No financial terms were disclosed, but Fortune has learned that the total investment was $264 million. Moreover, the deal was structured as preferred stock, meaning that Elevation would get paid back first in the event of a sale (and then share in any gains).
“That provision is paramount today, given the asking price. If Forbes sells for $400 million, then minority shareholder Elevation would receive a majority of the proceeds. Not too shabby, particularly given that Elevation had written its Forbes investment down by more than 75%.
“For Elevation, this would be its second major save. The firm previously looked to have made a massive mistake by investing $460 million into mobile device maker Palm, but used a sophisticated structure — plus an unexpectedly generous buyout from Hewlett-Packard — to eek out around a $25 million profit. It also has experienced large gains via smaller investments in both Facebook and Yelp.”
Read more here.
