Priavte Equity firm, Silver Lake Partners along with Andreessen Horowitz and Index Ventures has acquired a majority of Skype for ~$1.9 billion. This is a massive deal and perhaps shows that VCs are increasingly willing to play in later stage markets. It’s also interesting to me in that Private Equity and Venture Capital are teaming up.
I’m curious if this partnership is strictly driven by cash, or whether Silver Lake sees strategic or operational synergy involving VCs.
Numbers:
- The investor syndicate received 65% ownership in Skype for about $1.9 billion in cash and $125 million in debt
- New venture fund, Andreessen Horowitz invested $50 million, or 1/6th of its fund a stake of ~2%
- This deal valued Skype with a valuation of ~$2.75B
- Skype has 405 million users, meaning the buyers paid about $5 per registered user
- Registered Skype users increased by 47% in 2008 over 2007 and Skype continues to attract hundreds of thousands of new users each week
- According to Peter Falvey of Revolution Partners Skype is likely to do revenues of between $600 million and $650 million this year
- Based on these numbers, the deal valued Skype at about 4.5x revenues
- During eBay’s ownership period, the investment produced a negative 6% IRR, however, it still beats the S&P 500’s negative 10% IRR during the same period with
- eBay posted $8.54 billion in revenue in 2008 with Skype contributing a paltry $550 million, or ~$1.35 per user
- eBay’s value as a whole has declined by ~25% per year since acquiring Skype