Keen readers of this blog will remember last November Quinstreet, an online lead generation powerhouse, had filed to go public. The main concern was that media buying costs/cost of revenue had risen from 60% in 2005 to 70% in 2009 and margins were being pressured. In addition, a situation similar to Ad.com/University of Phoenix was brewing between Quinstreet and its largest client DeVry, who represented 19% of fiscal year 2009 revenue. DeVry has decided to go an alternate route and this revenue will need to be offset by Quinstreet’s diversification into other lead gen verticals.
Bloomberg reported that the firm has set an indicative price range of $17-19 per share and with the current interest (and assuming an $18 per share average for the calculation) the firm will aim to now raise $165.1m ($180m minus the juicy $15m fee for bankers). That will value the firm’s post-money equity at $808m. Quinstreet also has about $40m in debt and another $20m in earn out agreements.
The $165m is less than initially hoped. The company aimed to raise $250m but clearly has settled on the lower amount.
