Management Buyout at 360i Goes Against Ad Industry Trend

Following a long string of consolidation in the ad industry, one firm, Innovation Interactive leveraged a management buyout with the help of ABS Capital Partners. The newly-independent firm is parent company to 360i, SearchIgnite, and the Innovation Interactive Network.

Innovation Interactive bought back shares acquired by Livedoor Japan in the fall of 2005. The independent company employs over 170 throughout offices in New York, Atlanta, and Chicago. Its three business units are search marketing firm 360i; auction-based search management tool SearchIgnite; and performance-based ad network Innovation Interactive Network, made up of proprietary and third-party content sites and direct navigation domains.

Private equity firm ABS Capital Partners participated in the buyout. The private equity firm’s portfolio includes stakes in Vibrant Media and WhenU.com. Its previous investments include DoubleClick and Captivate Network. The firm’s investments are focused in the media, communications, software, business services and health care industries.

“Customers demand innovation, speed-to-market. It’s a better opportunity to control the business once again,” said Innovation Interactive CEO Will Margiloff.

Livedoor had little to do with day-to-day operations, but affected “capital expenditures and investments in our business organically and through acquisition,” said Margiloff. He said Innovation units had to go through an approval process with its now former Japanese-based parent company.

While the company will focus on organic growth, it may look for acquisitions. “We think there are technologies and services that would compliment [our] businesses nicely,” said Margiloff. He added there are opportunities for “great entrepreneurial tuck-ins.”

Shedding its parent company is a way for Innovation Interactive to maintain independence in an industry where Internet companies are buying advertising agencies and technology companies. “We feel like there are a lot of conflicts in the space today, which are going to get people scratching their heads a bit,” said Margiloff. “It’s better to be an independent player in the marketplace.

The buyout goes against the recent trend of industry consolidation, like the recent Microsoft acquisition of aQuantive, and the Google purchase of DoubleClick. Additional acquisitions in the space include the purchase of 24/7 Real Media by WPP Group, Yahoo’s purchase of Right Media, and the AOL purchase of AdTech, among other recent acqusitions.

Terms of the deal were not disclosed.