April 21, 2023
Home Runs: Did Dominion Just Become the Best PE Deal Ever?
Fox’s staggering $787.5 million defamation settlement with Dominion Voting Systems raises all sorts of profound questions about the 1st Amendment, the role of the press and the impact of increasingly partisan media voices on the future of our democracy. Those are questions that will undoubtedly be pondered by lots of big brains – but hey, this is an M&A blog, so the big question for me is the one addressed by this Axios report – did the Fox settlement just make Staple Street Capital’s 2018 acquisition of Dominion the best PE deal of all time?
The answer to that question just might be yes. Axios says that Staple Street paid $38 million for the company and that this settlement is a pretty staggering windfall for it based on its financial results since the closing of that deal:
Denver-based Dominion will be required to pay taxes on its windfall, plus give a hearty portion to attorneys. But this is still a massive amount of cash for a company of its size.
– Dominion currently generates around $45 million in annual EBITDA, up from $10 million in 2018, according to comments this morning from Staple Street co-founder Hootan Yaghoobzadeh on CNBC.
– In terms of revenue, Forbes once reported that Dominion generated $118.3 million for the three-year period between 2017 and 2019.
That’s nice EBIDTA growth, but it’s a rounding error compared to the impact of the Fox settlement, which on its own represents a 1,972% return on the original $38 million purchase price. So, what’s Dominion going to do with that money? According to the company’s founder, it’s going right out the door to the shareholders. Nice.
While Fox licks its wounds, it can take some consolation in the knowledge that its settlement payment is tax deductible, which according to media reports could result in a tax break for the company of up to $213 million.
– John Jenkins