Congratulations on the DICE Acquisition
Wow, lots of news in recruiting these days. As mentioned below, the WSJ is reporting that DICE has agreed to be acquired by Quadrangle Group.
This is great news for Scott Melland and the team and I wish them whole-hearted congratulations...
Scott came to the industry about 5 years ago and inherited a very difficult situation.
DICE was one of the originals in our business. Started almost 15 years ago as a BBS (remember that kids?) the Data Processing Independent Consultants Exchange has long been the favorite haunt of techies looking for their next gig in life.
(For fun, I dug up these blasts from the past:
Instructions on how to TELNET into DICE
Or
how about this instruction set reminding you that you can use your 1200 Baud modem to log in!)
DICE, which has been an ever-more successful since then, was acquired by EarthWeb, one of the darlings of the dotcom boom. DICE was the crown jewel of the business as the bust came along and all of EarthWeb's other properties faltered.
Unfortunately, EarthWeb did a type of securities offering called convertible subordinated debt. They borrowed $80mm and expected to be able to pay back the money with the currency that was the ever-increasing EarthWeb stock. Well events didn't turn out that way and before long, hedge funds had bought up the debt and were looking for a payback.
The largest holder of the debt, Elliott Associates, wrote this letter to the Board in November 2001 urging them to restructure.
But the founders of EarthWeb, the Hidary brothers, weren't particularly interested in losing control of their baby.
So even though the DICE unit continued to perform well, the company was ultimately not in a position to repay the $80mm. Think of it this way -- somebody buys a nice house worth $2 mm (OK, this is New York, somebody buys a nice 2-bedroom apartment worth $2 mm) but pays $10 mm for it and takes out a mortgage of that size. The house is still nice, it's still worth $2 mm, but there's no way the bank is ever going to see the $10 mm it lent for it.
The piper must be paid, though, my friends, and I can tell you, in a bout between entrenched management and bondholders, it's the bondholders who win.
So Scott and crew became the new leadership team after the Hidarys resigned, the company went through a bankruptcy process in 2003 (again, the house was always in good shape, it was just the financing that was a mess), and the company emerged stronger for it 2003.
I can't tell you how impressive it is what Scott Melland and his management team at DICE have pulled off. As a niche site going through the downturn... going through the even worse tech downturn... #4 in a very competitive category and with all of this distraction going on, they have not only survived, but thrived.
And the fact that Quadrangle, one of the sharpest media-focused private equity shops in the business, has agreed to pay ~$200 mm for them, is really a testament to their achievement. I was on their due diligence call list, and when I spoke to them, I could tell that DICE was being put into the hands of a sharp group of really smart and growth-focused investors.
Congratulations! Kudos! And best of luck on an even-more successful 2nd half of the decade Scott!
UPDATE: Red Herring has the best round-up so far in this article: Dice Gets a Roll.
