Follow-up: Ancestry.com & The Generations Network Bought Out for $300+ Million

Yesterday I wrote a brief article stating that The Generations Network (parent company of Ancestry.com, MyFamily.com and other sites) was being acquired by Spectrum Equity Investors. This morning the two companies issued the following press release offering more details:

News Release Issued: October 17, 2007 8:08 AM EDT

The Generations Network, Parent Company of Ancestry.com, to be Acquired by Spectrum Equity Investors

Investment Will Support and Accelerate Company's Strategic Direction and Growth Plan

PROVO, Utah, Oct. 17 -- The Generations Network, Inc., today announced that Spectrum Equity Investors will lead an investment of $300 million to purchase a majority interest in the company. Spectrum, a private equity firm based in Menlo Park and Boston, has been a shareholder in The Generations Network since 2003. Following the transaction, Vic Parker and Ben Spero from Spectrum will serve on the company's new board of directors, along with Tim Sullivan, President and CEO of The Generations Network. Additional terms of the transaction were not disclosed.  The acquisition is subject to customary regulatory and closing conditions and is expected to close in 2007.

The Generations Network's portfolio of sites and products includes Ancestry.com and seven international Ancestry sites, myfamily.com, Rootsweb.com, Genealogy.com, Family Tree Maker® and Ancestry Magazine. The company's current management team will continue to lead the company.

"As an investor in The Generations Network for the past four years, we have watched the company revolutionize the family history category by leveraging the power of the Internet to make it more accessible and easy for anyone," said Vic Parker, Managing Partner, Spectrum Equity Investors. "Ancestry.com and myfamily.com are clear category leaders in the growing and rapidly evolving family history and family networking markets. We are excited to partner with The Generations Network management team to continue growing this truly unique company that has the power to impact users at a very personal and emotional level."

The Generations Network properties have more than 900,000 paying subscribers and receive 8.2 million worldwide unique visitors per month (© comScore Media Metrix, August 2007). In the last 18 months, the company has solidified its position as one of the largest and most profitable subscription businesses online with success in several areas:

  *  Ancestry.com is the world's leading online family history resource, with more than 5 billion names from historical records, unmatched and proprietary search technologies and an engaged and passionate community of more than 2.5 million active members.

• A redesigned Ancestry.com experience has transformed an online research tool into a platform for aggregating the world's family history memories. Since late July 2006, more than 3.8 million family trees have been created on Ancestry.com, over 330 million names added to Ancestry Family Trees™, and more than 3.5 million individual photos, stories, or scanned documents have been uploaded by members.
• Ancestry.com now boasts the only completely indexed online U.S. Federal Census Collection (1790-1930), the most comprehensive online compilation of U.S. ship passenger lists (1820-1960), the largest online collection of African American historical documents and the most comprehensive online collection of U.S. military records.
• Beyond the United States, the Ancestry global network now includes local country sites for the United Kingdom, Canada, Australia, Germany, Italy, France and Sweden.
• The recent launch of DNA.ancestry.com™ now extends the Ancestry service into the rapidly growing field of genetic genealogy.
• AncestryPress™, a digital publishing platform integrated into Ancestry.com, now gives every family the ability to create completely unique, professionally printed family history books.
• Family Tree Maker® 2008, the No. 1-selling family history software package, is now available online and in major retail stores throughout North America and Europe.
• The redesigned myfamily.com site now has new features, providing families everywhere a safe, private, and free family home on the Web.

"Spectrum Equity has been an incredibly supportive and strategic-minded investor in our company for several years, so I am thrilled to have them acquire this majority interest in The Generations Network," said Tim Sullivan, company President and CEO. "2007 has been the company's most successful and profitable year to date, and 2008 looks even more promising as we grow our core businesses further, expand our global presence, and innovate with new products and services that help us realize our mission to connect families across distance and time. I appreciate Spectrum's vote of confidence in our direction and vision, and I am excited to work even more closely with Vic Parker and Ben Spero to continue to transform this amazing and unique business into a truly great company."

Lehman Brothers acted as financial advisor to The Generations Network, Inc. in the transaction.

About The Generations Network, Inc.

The Generations Network, Inc., founded in 1983, is the leading online network connecting families across distance and time. The Generations Network, Inc. provides people the content, community, and technology to empower them to find the people most important to them -- and discover and share their unique family stories. The Generations Network operates eight Ancestry websites, including http://www.ancestry.com/ (United States), http://www.ancestry.co.uk/ (United Kingdom), http://www.ancestry.ca/(Canada), http://www.ancestry.com.au/ (Australia), http://www.ancestry.de/(Germany), http://www.ancestry.it/ (Italy), http://www.ancestry.fr/ (France), and http://www.ancestry.se/ (Sweden) as well as http://www.myfamily.com/, http://www.genealogy.com/, and http://www.rootsweb.com/. The company also publishes Family Tree Maker®, the No. 1-selling family history software, Ancestry Magazine and more than 50 book titles. For more information, visit http://www.thegenerationsnetwork.com/.

About Spectrum Equity Investors

Spectrum Equity Investors is a private equity firm focused on investing in profitable, growing services businesses. Founded in 1994 with offices in Menlo Park and Boston, Spectrum manages over $4 billion in capital across five funds. The firm's investment team has deep experience in information services and online media, including investments in Demand Media, Interbank FX, iPay Technologies, NetQuote, Mortgagebot, RiskMetrics Group, Seisint (acquired by Reed Elsevier PLC.) and WorldCheck.  For more information, visit http://www.spectrumequity.com/.

Comments

[Randy Seaver]

Dick, will you provide some sort of analysis of this at some point? I would be interested in knowing what the chances are that the TGN components might be sold off, or will new companies acquired with the cash influx, or will the whole company be sold later on?

Leland Meitzler at the Everton's Publishing Genealogy Blog (http://genealogyblog.com) has links to TechCrunch with some interesting comments about the acquisition.

I have posted my own comments and analysis on Genea-Musings at http://randysmusings.blogspot.com/2007/10/tgn-acquired-whats-in-it-for-us.html.

[Dick Eastman]

---> Dick, will you provide some sort of analysis of this at some point?

Yes. I received a full briefing today from an impeccable inside source, including an insight into the company's plans for the future. Watch for a new article to be posted later this evening.

- Dick Eastman

[Bonnie]

Hello,
I haven't done genealogy since my son died 8 years ago.

But what a difference... all the free documentation seems to have been gobbled up by Ancestry.com and now looks like it will be even more locked up with this new buy out.

What are we to do now.

Thank you.

[penny]

As a long time user of Family Tree Maker and subscriber to Ancestry.com I admit to a love-hate relationship with both. The content of Ancestry.com has been invaluable to my research but their business practices have lead me to cancel and then later restart my subscription several times. Luckily I am able to afford the subscription price but I worry for those unable to.

Tim Sullivan, company President and CEO, says it all . . . "2007 has been the company's most successful and profitable year to date . . .". I fear that the profitable part of the statement will continue to be the more important business model for the company.

In response to Bonnie's comment, there is still a lot of free documentation out there via USGenWeb sites of various states & counties. What makes me nervous is that it is hosted by RootsWeb, which in turn is owned by Generations Network, Inc. We can only hope that the part of Generation's mission statement that says:
" . . our mission to connect families across distance and time. . ." will not become even more secondary to profit.

[Cheryl]

I'm sorry but I get really frustrated at comments about the cost of paying for records. However did you expect to get documentation of your family history?

You could go to the courthouses, libraries, and other archives. You would be paying for the trip, the lodging, the meals, etc.

On the other hand, we can pay a relatively inexpensive sum (stop yelling at me and think about this realistically) for a deluxe world subscription and have instant pajama access to way more than one could ever hope to find by going on multiple trips to multiple places.

Put it into perspective. I find the money in my budget to pay the fee.

[Bill West]

Cheryl
I'm sorry but I get frustrated with people who think everyone makes the same amount of money and
can afford a "deluxe world subscription"

There are a lot of people out here struggling along on hand me down computers and using dialup
connections because they can't afford DSL or cable. If not for the information I've found on the
free sites when I started I'd have never made the progress I've made on my family research.
And yes, I do now use a commercial site, but I have a monthly membership because I don't have
the money in my budget to spend on a "deluxe" one.

Put it in the perspective that those free sites are important to a lot of people.

[Kim Ostermyer]

The question of gains with Ancestry will be on all of our minds for some time. I can't afford the Deluxe subscription but have the U.S. subscription as that is the focus of my research across the board. I believe that Ancestry is a great deal, even though it is a bit pricey. It's a good deal because it gives people a headstart and the ability to do some of the basic research such as census records, pensions, etc. Given the choice of spending a day looking over census records on microfilm at the Family History Library (which is about 25 blocks from me) or on Ancestry, I'd take Ancestry on any given day to do that sort of research.

The acquisition will prove itself in time. I'm sure that Tim Sullivan and his team are well aware of what The Generations Network and the genealogy community have at stake here.

In regards to the free records mentioned in an earlier post--there is always a cost in this habit of ours, whether it be fuel, copies, or a motel room. Ancestry should be looked at as a tremendous respository and not some troll hunkered down at the base of everyone's family tree. It should also be noted that so much of the free stuff on the Internet comes with a lack of quantative source material, something Ancestry seems to be fairly good about listing.

[Sock Puppet Detector]

"Bill West" wrote:

> I'm sorry but I get really frustrated at comments about the cost of paying for records.

> I find the money in my budget to pay the fee.

So, the Ancestry.com sock puppet, having been exposed as such, is back under another name?

[Bill West]

Er no..the quotes you attribute to me were from a post from Cheryl that I was
responding too above mine.

[Jeanette]

As for the fee, I budget and save, because I find value and entertainment, it is less per year than cable television!

but on the toic of the buyout, I think one has to look at the bigger picture, Large Investment groups, Private Equity Firm's and financial companies are buying out most of the major Internet and e-commerce sites out there.

What is the future of the Internet, for information or anything when the majority of sites are owned by a small few? Just looking at the total number of companies Investment Firms like Spectrum Equity Investors own, makes it worrisome to me.
Others out ther "buying up the internaet'
IAC, Madison Dearborn Partners, Thomas H. Lee Partners, L.P. and Bain Capital Partners, LLC, Kohlberg Kravis Roberts, Blackstone Capital Partners ... Google any of them, or google for "Bought By Private Equity Firm" and you will find buyout after buyout.
What is difficult to take is that "my hobby, entertainment, addiction, passion, is turning corporate, and commercial", I do not know the future, I think it means there will be a faster release and increase in data available, but I also know it will be geared first towards making money for the Investement companies, at the highest profit possible.

[cheryl]

I am not a "sock puppet". I am a normal person who knows that people make choices every day as to where to spend their money. My point in all of this was to say that spending the money for an Ancestry subscription is much cheaper than even taking one genealogy trip at a distance where you need to pay for a hotel, meals, etc. We all make choices with our money. I choose to spend mine on a subscription.

[Maxine]

I have been on both sides of that fence: The haves and the havenots. I know what it is to have a child to raise and pay all the necessary bills from my salary. Suppose I had had three or four children. I worked five or six days a week in an office with no extra pay for the overtime, just accumulated time to use if we ever could get away from the work. There was no way I could have come up with the price of one of the genealogy programs at that time. I know there are many people in the same position today. I am thankful I do not to have to worry about money now. Please remember there are those who cannot afford even the monthly price of the programs because they have other obligations that have to be met first. Thank goodness, there are the free programs left, such as PAF.

[Richard]

The announcement said "investment of $300 million to purchase a majority interest." It was not clear to me if the $300 million investment was in the form of buying out existing shareholders, in which case no funds flow into the target company, or whether it was for the purchase of an increase of capital i.e. acquisitioin of new shares, in which case the target does have fresh funds for investment. Which was it?

[Claude]

I've been using Ancestry.com for about three years. I used the Free sites for 10 years, RootsWeb mostly. Before that I spent over 10 years in and out of Libraries. Best thing I did was subscribe yearly to Ancestry.com and have made strides in my research for $0.52 a day. Another cup of coffee anyone? I'm on DialUp.

[Craig]

I too have been on both sides of the fence. My biggest problem with paying for the service is that I have no more trust in it. I search and don't find at ancestry.com, but take a trip and personally look at the census and there is the person I was looking for. He/She is not indexed and cannot be found on the Ancestry site. How many other people have I missed because someone didn't transcribe the names correctly? I have doubled paid for research and I am getting tired of the promises.

[Elaine]

I just recently purchased Family Tree Maker Deluxe 16 for $29.95 at nothingbutsoftware.com http://www.nothingbutsoftware.com/Catalog_type.asp?ProductCode=37965
Personally, I use PAF (Personal Ancestral File), and am not interested in Family Tree Maker. However, the cool thing is what is in the box! With the purchase comes 9 months of U.S. Deluxe Ancestry.com It can be used up to January 31, 2009. I called Generations Network, Inc. in Provo, to confirm, and they reassured me I would just start up this offer when mine expires in February 2008. A very good deal--IF--they will abide by their offer, and I trust that they will!

[Sue]

Many public libraries have subscriptions to Ancestry.com. You have to use a computer in the library to access Ancestry, but you won't have to pay the subscription price. While at the library, you may find some genealogy books and resources of interest.