ZM Capital agrees debut deal with Microsoft

The newly-formed private equity firm founded by three ZelnickMedia partners has emerged as the previously unidentified buyer of Greenfield Online’s internet survey business. Microsoft recently bought Greenfield for $486m after it bettered by $2 per share an earlier offer made by Quadrangle Group.

ZM Capital, a media and entertainment-focused private equity fund, has emerged as the buyer of Greenfield Online’s internet survey solutions business following the firm’s $486 million (€330 million) takeover by Microsoft.

When the Microsfot deal was announced on 29 August, the software giant indicated that it had plans to sell Greenfield’s internet survey solutions segment to an unnamed third party buyer and focus solely on its European price comparison website ciao.com, which it plans to use as a launch pad for commercial search in Europe.

ZM Capital is the buyer set to purchase the division, according to Securities and Exchange Commission filings. The purchase is being carried out by ZM Surveys – a shell company that ZM Capital organised for the purposes of the transaction.

The New York-based private equity firm was established earlier this year to invest in media and entertainment assets. Its founding partners – Andrew Vogel, Jordan Turkewitz and Seymour Sammell – are all affiliated with ZelnickMedia, a New York-based investment partnership specialising in media companies founded in 2001 by Strauss Zelnick, former president and chief executive officer of BMG Entertainment. ZM Capital partners is a separate legal entity from ZelnickMedia.

The Greenfield transaction represents the private equity’s first transaction from its first fund, which is still being raised.

Andrew Vogel

Andrew Vogel, a partner at ZM Capital, listed Greenfield’s management, blue chip client base, global leadership and favorable industry trends among the reasons that attracted the fund to investing in the company. He cited “the migration of market research data collection from offline sources to online” among those favorable industry trends.

Greenfield’s internet survey solutions business helps marketing research firms and consultancies plan and execute online surveys using proprietary online technologies and partnerships. The firm has approximately 1,000 market research clients.

It is also the larger of Greenfield’s two businesses. In the most recent fiscal year, approximately 74 percent of Greenfield’s revenues came from internet survey solutions and the rest from Ciao’s comparison shopping websites.

Vogel confirmed that ZM Capital intends to keep Greenfield’s internet survey solutions business as an independent, standalone company. ZM Capital will also keep existing management in place.

A spokesperson for Greenfield confirmed that it was Microsoft that identified ZM Capital as the buyer for its internet services solutions business. However, is unclear whether Microsoft bid for Greenfield together with ZM or whether it bid alone.

Microsoft’s agreement to buy the Connecticut-based firm for $17.50 per share in cash trounced an earlier takeover offer of approximately $426 million by US media and communications-focused buyout firm Quadrangle Group, which offered $15.50 per share for the company. In connection with this, Greenfield paid Quadrangle a $5 million break fee.

Both Microsoft’s purchase of Greenfield and its sale of the company’s internet solutions business to ZM Capital are expected to close in the fourth quarter of this year.