The company’s private equity firm owner Apollo Global Management, is considering a sale after hearing interest from a buyer, The Wall Street Journal (WSJ) reported Tuesday (Sept. 16), citing sources familiar with the matter.
Those sources say that any deal could value AOL in the neighborhood of $1.5 billion, though it’s possible talks won’t lead to a sale. Apollo had purchased AOL from Verizon in 2021 in a $5 billion deal.
AOL generates about $400 million in annual earnings before interest, taxes, depreciation and amortization, the sources told WSJ. The company’s chief business lines include software for internet privacy and protection, along with the AOL.com website and email domain.
PYMNTS has contacted Apollo for comment but has not yet gotten a reply.
As the report noted, those email addresses, along with AIM chats and CDs offering limited-time free web access, had once been AOL’s calling cards. The company is set to phase out its dial-up internet service later this month, closing out an era for Gen Xers and older millennials familiar with the whine of a modem as it connected to the internet.
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WSJ also describes AOL’s “tortured deal history.” The company combined with Time Warner in 2001, an ill-fated $100 billion merger that led to regulatory investigations and billions of dollars in write-downs. Verizon bought the company for $4.4 billion in 2015.
Apollo’s apparent interest in a sale of AOL comes as private equity (PE) operations are facing a funding downturn, with fundraising in the space hitting its lowest level in seven years as of June of this year.
This downturn happened even with PE outfits providing discounts like management fee cuts, “early-bird discounts” for investors who sign on quickly to new funds and other deals, per a Financial Times (FT) report last month.
They “are offering a smorgasbord of discounts,” said Marco Masotti, global head of private equity fundraising at law firm Paul Weiss, who noted that PE firms were “facing mounting fee pressure and agreeing to a cascade of discounts.”
Fundraising among these firms had fallen by almost a third from record levels in 2021. Higher interest rates and a downturn in dealmaking have left PE outfits unable to sell off trillions of dollars worth of aging investments, the FT said. This has driven increasing frustration among investors, many of whom are now declining to back funds.
