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Generations Network Inc., which owns genealogical site Ancestry.com, said Wednesday it sold a majority stake to a group led by Spectrum Equity Investors for $300 million, including debt. Spectrum, a private equity firm with offices in Menlo Park, Calif., and Boston, had owned about 10% of Generations. The deal will boost its holding beyond 50%, said Vic Parker, a managing director. All but a handful of Generations Network shareholders are expected to sell. Management will also retain a stake, said Tim Sullivan, president and CEO. Generations' shareholders number in the hundreds, Sullivan said. They include Sorenson Media, @Ventures (CMGI Inc.'s venture capital group), Crosslink Capital and Spectrum. Parker would not disclose which investors are selling and which are joining Spectrum in the deal. It was not clear who was providing debt financing. The transaction is expected to close later this year. The Provo, Utah-based target, whose genealogy Web sites also include MyFamily.com and Rootsweb.com, provides a way for subscribers to share information about their forebears. The company also provides access to census records, U.S. ship passenger lists from 1820 to 1960 and collections of African-American historical documents. Generations Network, which changed its name last year from Myfamily.com, has more than 900,000 paying subscribers. It receives 8.2 million worldwide monthly unique visitors, a company statement said. Revenue in 2006 was $150 million, up from $47 million in 2002, according to Sullivan. The company is a leader in the family history category, Parker said. "This company in particular is employing technology and leveraging the Internet in a way that uniquely impacts people on a personal level," he said. It has received about $95 million in venture capital funding since the 1990s, although its last VC round ended in 2001. Spectrum didn't invest until 2003, Parker said. Generations Networks tapped Greg Dalvito and Paul Inouye of Lehman Brothers Inc. for financial advice. Mark Bonham of Ray Quinney & Nebeker PC was its legal adviser. Spectrum did not use an outside financial adviser. David Breach of Kirkland & Ellis LLP was its attorney. Generations Networks, founded in 1983 as Ancestry Publishing, moved into distributing CD-Roms in the 1990s. It went online in 1997. "We're growing and we're profitable," Sullivan said. "We've rebuilt and relaunched a new platform that will maintain and extend the lead for family social networks on the Web." The company, said Sullivan, aims to expand internationally, concentrating on China and Latin America. It has cut a deal with the Shanghai library to digitize the world's largest collection of "jiapu," which refers to Chinese genealogical records. Generations has also opened an office in Beijing. "We believe China is a hot potential market," Sullivan said. More growth is expected to come with the recent launch of DNA Ancestry at dna.ancestry.com. The Web site enables family historians to link traditional genealogical data, such as birth, marriage, death and census records, along with family trees and DNA testing, to confirm family relationships, locate distant relatives and track family lines back toward the origins of humanity. Generations has teamed with Sorenson Genomics to offer the DNA kits. Asked about plans for an initial public offering, Sullivan and Parker skirted the issue. "We have a lot of options," Sullivan said. "We're really focused on building a great company and believe the rest will take care of itself."  Deal Video
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