Case Study: Credibility Corp.
Explore this investment
- Sourced Platform for Executive
- Vision to Understand a Complex Business
- Innovative Deal Structure
- Early Management Liquidity
- Complex Sale Negotiations
We first met serial entrepreneur Jeff Stibel in 2007 when, acting as CEO of small business (“SMB”) solutions provider Web.com (NASDAQ: WWWW), he was leading a dramatic turnaround of the business which would triple shareholder value in less than four years. After leaving the company in 2009 following a successful sale to Website Pros, Stibel reached out to GHP to help determine his next move.
According to Stibel, “I was determined to acquire an online platform in the small-business and local market and spoke with a number of different venture and private equity firms. Great Hill was an early call given their sector knowledge, but what set them apart was the frequency and quality of deals that their team produced for me to evaluate”
After reviewing nearly twenty opportunities over the course of nine months, we were presented a unique opportunity – Dun & Bradstreet (“D&B”) was seeking to divest its Self Awareness Solutions unit (“SAS”), a non‐core asset that provided credit management solutions to more than 150,000 SMB customers. Whereas most prospective buyers focused on the unit’s poor financial performance while under D&B ownership, GHP and Stibel, drawing on their shared experience in the SMB and online markets, saw through the numbers and honed in on the business’ unique product set and strong competitive position in a large and underpenetrated marketplace. We evaluated the opportunity quickly and worked through a complicated set of seller objectives to complete the acquisition, structuring the transaction as an ongoing strategic partnership and establishing a new company, Credibility Corp., (“Credibility” or the “Company”) to acquire the assets of D&B’s SAS (“SAS”) and receive perpetual access to D&B’s data and brand in exchange for ongoing royalty payments.
According to Stibel, “GHP’s perseverance and skill in working through a complicated and lengthy due diligence and negotiation process was critical to executing this transaction. I look forward to a successful partnership as we continue to grow Credibility Corp over the coming years.”
Shortly after closing the transaction, the Credibility management team moved swiftly to reshape the company, revising employee incentive structures and expanding the salesforce – in fact, within only a quarter, the business began to grow after several prior years of decline. Following this initial momentum, the Company began to transform its business by shifting its sales model from one‐time transactions to recurring subscriptions. In just over one year, the team re‐architected the company’s entire IT and software infrastructure, a task that had previously stymied D&B. Rapid product innovation followed, including the introduction of an innovative freemium model as a well as a new credibility monitoring service. As a result of the management team’s product innovation, tactical execution and strategic thinking, in just four years Credibility was able to double its sales and triple is cash flow from operations.
By late 2013, Credibility’s impressive execution did not go unnoticed by D&B, to whom the Company continued to pay large and increasing annual royalties. Following a complex eighteen month negotiation, GHP and Stibel were able to bring D&B from an initial offer of less than $100 million up to a final purchase price of $320 million, closing in May 2015 on a sale resulting in a nearly 11x multiple of invested capital. Post-closing, the Credibility management team was given additional business segments of D&B to oversee which accounted for nearly one-third of the company’s total revenue. Finally, recognizing his accomplishments with the Company, Stibel was asked to serve as a Vice-Chairman of Dun & Bradstreet.