Mae Heritage’s announcement last week of its intention to sell to the US $ 600 million Francisco Partners fund surprised some market players. On the face of it, its sale of the developer of the platform for creating and managing family trees, which under certain conditions could reach $ 700 million, is successful for all parties: the company has raised only about $ 50 million since 2011 and veteran investors are now expected to pay back four times as much.
Read more in Calcalist
However, information that reached Calcalist shows that Mae Heritage has been very profitable for a long time, and the market estimates that it finished 2020 with an annual profit of about $ 40 million. Allegedly, these figures suggest that the company could have won a much higher selling price.
The market estimates that the willingness to compromise on the price stems from the terms of the deal with Francisco, which will allow May Heritage to continue operating as it has done so far without going public, while investors and veteran employees can now meet with money. This outline seems ideal for CEO and founder of Mae Heritage Gilad Yefet, who believes that now is the time for an exit: “It’s hard to be a promising start-up after 17 years, and among the options on the horizon, the Francisco option was best for me,” Yefet told Calcalist “,” are the factor that most wants to bring the company to an exit without changing world orders. “
The long list of investors and shareholders that May Heritage has accumulated since its inception includes a large number of funds and private investors, some of whom are very well known in the local capital market. Among the prominent funds is the Bessemer Foundation, whose senior partner in Israel, Adam Fischer, has been accompanying Gilad and the company since 2012; Secondary and ISF Secondary Funds; And the European Excel Foundation. The only institutional investor in the company is Hellman Aldubi’s pension and provident funds, which invested in May Heritage in 2016 and are now expected to return 400% in the amount of NIS 15 million.
Among the private investors is entrepreneur and investor Gigi Levi-Weiss, a partner in the NFX fund, who will continue to hold shares even after the sale; Developer Yuval Rechbi, one of the founders of BRM; Former partner husband Ilan Ben Dov and many others (see box).
The acquirer of Francisco Partners entered the local market for the first time in 2016, and increased its activity with the appointment of former Alvarion CEO Eran Gorev as its Israeli partner. – 2014 for $ 130 million, and sold it back to the company’s founders and investment company Noblepina for $ 800 million in 2019.
“Gilad is a respected visionary in the field of genealogy, who built a company of glory,” said Gorev. “He is an excellent partner who has built a great team with a strong company culture. It is a company that constantly invents itself technologically on a topic that affects many people around the world. “We will do everything to help the company expand its areas of activity and focus on helping it continue the business momentum it has built in the international markets.”
According to Levi-Weiss, “I believe that Gilad and the team will continue to take the company to new heights, this time alongside Francisco Partners. Any user of May Heritage who builds his family tree can get value from family trees built by other users, hence new competitors will be almost impossible to provide A similar value. The network effect also exists in the company’s DNA tests, and creates customer retention that will allow it to grow significantly in the coming years. “For most founders, exit is the end of an ambitious vision that has not yet been fully realized,” Fisher wrote in a post. “Mae Heritage has developed a product that touches people for many years and will continue to live for a long time to come.”
In the past year, Mae Heritage was published against the background of the establishment of a private corona testing laboratory in Petah Tikva, which, according to Yefet, was a marginal part of the deal. “As long as the laboratory is needed by the state, it will continue to operate. When the corona is defeated, we will decide together what to do with the laboratory,” Yefet said.