ANDOVER, Mass. – In a move intended to remedy longstanding market confusion over its primary business focus, Internet operating and development firm CMGI Inc. announced last month that it has instituted a significant structural overhaul.
Specifically, the Andover, Mass.-based company has formally organized its 17 majority-owned operating companies and @Ventures investing affiliate into six official business lines, the first five of which are operational disciplines like Internet professional services and interactive marketing. The sixth business line is @Ventures, whose quartet of active funds has now been consolidated into a single evergreen vehicle named CMGI @Ventures IV.
While the parent company’s announcement has led to speculation over possible layoffs and divestitures, @Ventures Managing Partner Peter Mills emphasized that his organization is not anticipating any such moves.
“We’ve been talking about a restructuring since March or so, and that probably picked up a bit more steam as CMGI looked at aligning its operating companies the way it has,” Mills said. “Nothing is happening with our staff… [and] it is a non-event for [our portfolio companies].”
He also denied the suggestion that the restructuring was, in part, responsible for @Ventures only completing one announced investment since June, despite officially completing 18 deals in the five months prior. Instead, Mills placed the blame on a circumspect market and wildly fluctuating valuations.
“A lot of this was just a pathway to profitability – how we best optimize our synergy,” Mills said. “By aligning the company this way it’s much clearer and cleaner.”
It’s important to note, that the CMGI announcement is not without its VC casualties.
Indeed, the firm’s proposed $1.5 billion @Ventures Global Partners vehicle is being scrapped marking the formal end of a still-informal alliance between @Ventures, Hicks, Muse, Tate & Furst Inc. and Pacific Century Cyberworks Ltd. (PCCW), which had each planned to commit $500 million to the venture.
“The potential joint venture we had discussed with CMGI and PCCW was one of those things that was just a bit too grand in scope to actually be practical,” said Dan Blanks, a senior managing partner with Hicks Muse. “We’ve decided we’re going to do deals together, but on a one-off basis because it just didn’t make sense to make a formal relationship and staff up and all of that.”
Mills echoed that sentiment and added that the decision to discontinue @Ventures Global Partners discussions should not be construed as an indication that CMGI @Ventures is uninterested in international investing.
“We’re by no means holding back on international deals and expect to work with both Hicks Muse and PCCW in the future,” he said.