Aligned with the ongoing consolidation we’re tracking in the website world, Clearlake Capital today announced the completion of its $3 billion acquisition of Endurance International. It will also partner with Siris Capital to form Newfold Digital, a rollup that combines the products of Endurance and Web.com.
Technically, Clearlake will acquire Web.com from Siris Capital at an unconfirmed enterprise value of $2.2 billion — which would be slightly more than Siris paid for Web.com in 2018. Siris will roll its equity in Web.com into Newfold Digital to become an equal share partner with Clearlake, according to DNW.
Web.com CEO Sharon Rowlands will take over as CEO of Newfold Digital — a strong choice says Localogy CEO Bill Dinan: “Rowlands is primed for this role given her industry tenure, executive track record, and domain expertise that flows from her leadership of Web.com and ReachLocal/Gannett before that.”
Rowlands herself meanwhile emphasizes the new entity’s portfolio strength, stating in a press release, “This combination creates an industry leader with tremendous scale and a strong portfolio of marquee brands and product offerings that furthers our commitment to helping SMBs establish themselves online.”
Follow the Money
This rollup represented by the newly minted Newfold Digital is a considerable event in the website world, and a consolidation play that could be detected from a series of recent moves.. and isn’t necessarily over (more on that in a bit).
As for what led up to this point, several clues were in the air, as noted. As we examined in November, Clearlake acquired Endurance for $3 billion. For those unfamiliar, Endurance has a cloud platform that consists of an expanding suite of products that help SMBs establish and optimize online presence.
That product suite includes a website builder and hosting, as well as adjacent functions that continue to expand — per our ongoing Website Windup series. Endurance brands include Constant Contact, Bluehost, HostGator, and Domain.com. Over the past decade, Endurance has grown to serve about 5 million SMBs.
Then, last month, Clearlake made a strategic investment in Web.com. The amount was undisclosed but the move effectively made Clearlake a minority equity holder, aside Siris’ majority ownership. Like Endurance, Web.com has itself expanded in the past decade into several adjacent website and marketing services.
That brings us to the present and this week’s mega-rollup of all the above pieces into Newfold Digital. Given Clearlake’s private equity orientation, we presume this will be followed by some degree of streamlining. Clearlake will likely apply its O.P.S. framework for operational efficiencies and balance sheet optimization.
As far as we know, most of the brands that sit under Endurance and Web.com will remain in tact for now. However, email marketing platform Constant Contact will be spun out. We could see more products follow that path in the coming months, as the overall product suite and “house of brands” is optimized.
Panning back, the momentum for this rollup — and other deals that continue in the website world — tells us that more consolidation could be coming. Given that core website products like hosting are commoditized, it’s all about growing ARPU and lifetime value through strategically-assembled adjacent products.
We’ll keep watching for that to unfold. Meanwhile, see more analysis on the events leading up to this week in the below M&A roundtable we held in November.