eBay Finalizing Sale of eBay Enterprise to Private Equity Firm
As reported by numerous media outlets last night and this morning, eBay hopes to finalize and announce a deal today for the purchase of eBay Enterprise, the business unit which includes Magento, to a private equity firm for approximately $900 million.
Earlier this year, eBay announced plans to spin off PayPal and eBay Enterprise into their own, separate businesses in order to allow eBay to refocus on their core auction business and to allow eBay Enterprise and PayPal to focus on their own specific niches in the eCommerce industry.
Revenue at eBay Enterprise grew 6% in 2014 to $1.24 billion, or about 7% of the total revenue of the combined eBay/eBay Enterprise/PayPal venture.
Multiple private equity firms have been in talks with eBay to purchase eBay Enterprise. eBay also considered an IPO for eBay Enterprise as well as selling the business unit to an established player in the eCommerce industry.
The winning offer is said to have come from a group led by private equity firm Permira and including Sterling Partners.
In analyzing another recent acquisition by Permira, TechCrunch reported that the private equity firm was expected to keep the newly acquired business intact and operating as it had been before the acquisition, but with a new focus on generating more revenue while lowering expenses and operating more efficiently.
In my personal opinion, Magento returning to it’s roots as a private company is great news. The pressures and red-tape brought about by being part of a Fortune 500 publicly traded company have really slowed down the pace at which Magento Inc has been able to react to market changes in recent years. Additionally, the fact that both Magento 1 and Magento 2 are open source products available on GitHub, surrounded by a vibrant community of developers and merchants means that no matter what plans Permira has for eBay Enterprise, Magento as a platform will continue to thrive.
Update: Craig Hayman, President of eBay Enterprise has posted a blog article on the eBay Enterprise site naming all of the private equity firms involved. eBay Enterprise is being purchased by “a consortium consisting of Sterling Partners, Longview Asset Management, and Innotrac Corporation, a Sterling Partners portfolio company, together in partnership with companies owned by the Permira Funds”.