The Executive Lounge

Featuring 

Vivek Shah

CEO, Ziff Davis

Hosted by

Michael Seidler

Founder & CEO, Madison Alley Global Ventures

September 20, 2022 @ 1-2pm ET

Executive Highlights

Overview of Vivek Shah:

Vivek Shah is the CEO of Ziff Davis, an internet and digital media company. Prior to purchasing Ziff Davis, Shah held several positions at Time Warner Inc.

Overview of Ziff Davis:
Ziff Davis is an internet and digital media company that primarily owns technology-oriented media websites, online shopping-related services, and software services.

-Interview-

Who is Vivek?

Vivek Shah was elected to the Board of Directors of Ziff Davis (formerly J2 Global) in January 2018, where, during that time, he has also served as Chief Executive Officer. Mr. Shah led the acquisition of Ziff Davis when it was a private company and its subsequent sale to J2 Global, before J2 Global was renamed to Ziff Davis in 2021. From 1995 to 2009, Mr. Shah held various management positions at Time, Inc., including Group President, Digital and President of the Fortune/Money Group.

Ziff Davis Over the Years

Ziff Davis (NASDAQ: ZD) is a vertically focused digital media and internet company whose portfolio includes more than 40 leading brands in the areas of technology, entertainment, shopping, health, cybersecurity and MarTech.

They have a unique and compelling turnaround story in the world of digital media. By the mid- to late 1980s, Bill Ziff decided to sell his company, and it went through a series of transactions. Eventually, lenders took control of the business. In 2010, a deal was structured and Mr. Shah bought the company from its lenders. Two successful years later, he got a call from J2 Global with a proposition to acquire the company.

$2.8 Billion Portfolio

The company specializes in both content and software, which, as IP-based businesses, have many shared characteristics.

Ziff Davis operates and buys companies that produce content and software that help people and businesses navigate the digital world. The company operates more than 40 brands across their various verticals, including:

• Shopping — RetailMeNot, Offers.com
• Technology — PC mag.com, Mashable, Spiceworks,
• Gaming — IGN, Humble Bundle, Humble Games
• Health — Everyday Health, MedPage, Baby Center, Lose It!
• Cybersecurity — Strong VPN, Ecrypt.Me
• Martech — iContact, MOZ

Since it operates in such a variety of verticals, Ziff Davis has access to greater deal flow compared to other companies. Ziff Davis operates a diversified portfolio with well distributed risks and opportunities. The company looks for tech-enabled sectors experiencing digital transformation.

Ziff Davis is decentralized — with roughly 5,000 employees companywide, but only 60 in corporate. The vast majority of those are working inside specific brands and specific business units.

Ziff Davis advantage:

• Superior monetization of audiences
• Proprietary tech platforms for scale & efficiency
• Returns-based resource allocation
• Deep bench of digital executives

Strategic M&A at Ziff Davis

Acquisitions are a fundamental part of Ziff Davis’ growth strategy. The company has a steady and repeatable system that drives consistent growth. Today, Ziff Davis encompasses a collection of businesses that have been acquired and enhanced since 2013.

Core M&A Principles:

• Digital Transformation
• Large and Growing Verticals
• Platform-Based Value Creation
• Lower Middle Market
• Focus on Free Cash Flow
• Patience and Discipline

Transaction Types include:

• Platform Acquisitions
• Tuck-In Acquisitions
• Divestitures
• Strategic Transactions

Mr. Shah describes Ziff Davis as a management-friendly business model. “We ourselves are an acquisition so we know what management teams are looking for,” Mr. Shah said.

He also cautions businesses not to get overzealous when it comes to M&A. “If you don’t have to sell, why sell? If you don’t have to buy, why buy?”

Stakeholder Capitalism

Capital allocation is the single most important function of a CEO and executive team. In the case of Ziff Davis, Mr. Shah said they invest in the company through capital expenditures and buying shares opportunistically, with M&A being the primary place for directing resources.

Capital Allocation Framework Maximizes Shareholder Value

• Capital Expenditures
• Mergers & Acquisitions
• Share Repurchases

The leadership team runs the company in the interest of its shareholders, employees, partners, vendors, customers and communities in which they operate. It’s about creating social and financial value. “It’s why we come to work, and it’s important,” Mr. Shah said. “This helps recruit and retain talent. Employees want to have a positive impact in the world, and they want to work for a company that cares for them and the world around them. Things have fundamentally changed. Ziff Davis recognizes and embraces that change.”

Innovation

“One of the things we look for are brands that can stand the test of time,” Mr. Shah said. “If you look at our brands, they are all brands that succeeded in Web 1.0, 2.0 and 3.0. They are trusted and differentiated and relevant brands that successfully made the desktop-to-mobile pivot, the search/social pivot, the web to app pivot, and more. These brands have figured out a way to maintain their market position and get to the next level. “Whatever it is, I’m a believer in brands,” Shah says. “And it must really be a brand — even if it’s stumbling, that’s okay.”

At Ziff Davis, Mr. Shah and his team are constantly strengthening its position in both new and existing verticals. Being open minded to value-creation opportunities is key. “We are always looking for new ways to create value for our shareholders,” he said.

Q&A

Q: Where do you see the M&A industry heading in the next six months?

A: Because of the uncertainty in the marketplace, more of the same. Not a lot of deals or IPOs. It will be relatively quiet. Adobe had a big transaction recently. Strategic things will still get done, but I think we’re going to see less activity.

Q: What was a challenging part to the Ziff Davis / J2 deal?

A: When we were acquired in 2012, it was to leverage the balance of the company to build a bigger company. It couldn’t have worked out better. We’ve been here for 10 years now, and many of the team has, too. Sometimes promises are made and aren’t kept, but that wasn’t the case for us.

The most challenging part of the spin-off was that it happened in six months. It was the right thing for us, and maybe we were lucky. We were focused on getting it done. The market was right, and it was a good thing we did it as quickly as we did.

Q: With so many options to build-buy-partner, add a bolt on, be disruptive etc., how do you prioritize your investments and ROI?

A: Everything is a cash-on-cash return. The one advantage M&A has over internal development is timing and scale of capital to deploy. We look at both. It can be a means toward an end, but it can be a faster way to achieve your goal.

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