Elevation makes 2x on first exit

Two years after merging video game developers BioWare and Pandemic, Elevation Partners has doubled its money by selling the combined company to Electronic Arts, led by former Elevation partner John Riccitiello.

Elevation Partners has completed its first exit, the sale of video game developer VG Holding to video game giant Electronic Arts for $620 million (€438 million) in cash. Electronic Arts will also make a $35 million loan to VG Holding, and will issue up to $155 million in equity to VG employees subject to “time-based or performance-based vesting criteria”.

Pandemic game
Destroy All Humans

Elevation, based in Menlo Park, California, created VG Holding in 2005 from the merger of role-playing game specialist BioWare Corp and action/adventure game developer Pandemic Studios. Elevation paid $300 million for the combined company. The acquisition was Elevation’s first deal.

At the time, Elevation partner John Riccitiello led the deal, and became interim chief executive of the resulting company. Riccitiello had been president and chief operating officer of Electronic Arts for seven years before joining Elevation in 2004.

This March Riccitiello left Elevation to return to Electronic Arts as CEO. “Leading EA has always been my dream job,” Riccitiello said in a statement at the time.

The deal is expected to close in January 2008. Lehman Brothers was financial advisor to Elevation, and Simpson Thacher & Bartlett was legal counsel.

Elevation closed its debut fund on $1.9 billion in August 2006. The firm’s partners include former Blackstone senior managing director Bret Pearlman, Silver Lake founding principals Marc Bodnick and Roger McNamee, and U2 lead singer Bono.

The firm focusses on the media, entertainment and consumer industries. Its prior investments include a minority stake in family-owned media company Forbes and a $325 million, 25 percent stake in publicly traded “smart phone” maker Palm.