Internet Brands (IB) has acquired High Gear Media, the companies announced today. The deal, which will see the six-year-old automotive publisher added to an existing collection of car buying sites (including CarsDirect.com) and more than 130 auto enthusiast communities (like ClubLexus). Collectively, the portfolio of online properties will serve 35 million unique monthly visitors, just over 7 million of which will arrive from High Gear properties.
IB declined to share the terms of the acquisition, but sources close to the company describe it as a positive outcome for High Gear’s investors and employees. The Menlo Park startup had raised $12 million across two rounds of funding from investors that include Greylock Partners, Accel Partners*, and DAG Ventures.
“We liked the team a lot. It’s a small team, but they have accomplished a lot,” says IB CMO Chuck Hoover. “Of course we like the sites as well, particularly the quality of the content content being produced, which is particularly strong. And High Gear has attracted a really good in-market audience. There’s very little overlap in our existing audience and theirs, which means this deal will be very additive and will give us more scale.”
The bulk of High Gear’s team will remain with the company under the acquisition, although sources suggest some senior management could transition out within the first year. The company was founded by ShopLocal founder Hesky Kutcher in 2008, who stepped back to the role of chairman and ceded control to former Sidestep and Yahoo exec Matt Heist less than two years later. High Gear will continue to operate in Menlo Park, despite the fact that the overwhelming majority of IB’s Automotive Group is based in Los Angeles.
In the year leading up to the acquisition, High Gear had pared down its portfolio of websites from more than three dozen to just three: review and listing site TheCarConnection.com, green vehicle site, GreenCarReports.com, and luxury and performance vehicle news destination MotorAuthority.com. The company, like most publishers, has focused increasingly on serving its audiences on mobile devices, even taking the unusual step of removing all paywalls and offering all of its content for free through a newly-launched iOS app.
The automotive category is a highly competitive one in which IB is competing with a consortium of large media brands like Cox Enterprises, owner of AutoTrader and Kelly Blue Book, Hearst Magazines, owner of Road & Track, and the consortium behind Cars.com, which includes Gannett Company, the Graham Holdings Company, the Tribune Company, the McClatchy Company, and A.H. Belo. These publishers must also compete with the more technically-minded TrueCar for the business of highly-coveted automotive buyers.
“The autos category was the original category at Internet Brands and it’s still an extremely important one,” Hoover says. “If this deal indicates anything, it’s that we’re focused on growing that category even further. The autos category has been around for a while and was one of the first industries online in terms of commerce and research. It’s evolved over time and the consumer has a lot of different choices. We serve most of the categories in autos – new, used, advertising, ecommerce, content, communities, and even B2B.”
Internet Brands was itself just acquired by KKR in July in a private equity transaction valuing the company at $1.1 billion. The High Gear acquisition marks the first major announcement by the company following this deal. “We were definitely talking to High Gear before the KKR deal was completed, and I don’t think it changed much,” Hoover says. “But I would say it’s an indication that KKR believes in what we’re trying to accomplish and are supportive of that path.”
This path could include more M&A activity on the part of Internet Brands, not only within the autos category but across the company’s numerous business categories. In addition to its autos portfolio, IB owns Lawyers.com and ApartmentRatings.com among other properties. IB also offers data, content, and technology to automotive OEMs through its Autodata Soulutions division.
Hoover describes this inorganic growth strategy as a strength of IB’s. “I’d say we’ve demonstrated an ability to find attractive assets – to source, acquire, and integrate them effectively,” he says. “We try to figure out what makes the most sense for each deal. There are no hard and fast rules. Some acquisitions we consolidate entirely, others we leave alone and allow to build up as a hub.”
He continues, “In this case, the end users won’t see a lot of difference right away. We really like the editorial team, and they will continue business as usual. We will take this great content they’re producing and look for ways to distribute that through our other autos sites. At the same time, we’ll take our existing car buying services and offer that to existing High Gear audiences. In automotive for us, it’s about growing the existing properties organically and opportunistically looking for ways, like High Gear, to find ways to integrate these external assets strategically.”
*Accel Parnters is an investor in Pando.
- High Gear MediaHome of premium automotive destinations.
High Gear Media is a next-generation automotive publisher that connects car-seeking audiences with content and tools to help them make better decisions -- on desktop and mobile devices. High Gear Media's owned and operated automotive destinations have over 7 million visitors monthly and include TheCarConnection.com, the car review site that makes car research easier, its luxury and performance site, MotorAuthority.com, and the leading green car site, GreenCarReports.com. High Gear Media's editorial staff and contributors have written at publications such as Car and Driver, AOL Autos, AutoWeek, Automobile Magazine, and Wired.