Private equity investment firm General Atlantic, an early investor in pioneering Internet firms such as Priceline and E*Trade, has announced its agreement to purchase Network Solutions from current owners Najafi Companies. The deal represents the third change in ownership in less than nine years for the company once intimately connected to virtually all commercial Internet traffic.
Throughout the early stages of the go-go Internet boom of the 1990s, Network Solutions served as the ultimate gatekeeper-the sole authority over the international .com, .net, and .org domains. Independent public oversight, the loss of registrar monopoly powers and the handoff of the .org domain in the late 1990s caused Network Solutions to sell out to security firm VeriSign for billions, and by 2003 VeriSign had imposed its own brand on the company's top-level domain (TLD) registry, leaving it with little use for the Network Solutions company.
So in late 2003, VeriSign shed 85 percent of its interest in the consumer and small-business services elements of Network Solutions in a $100 million deal to Najafi Companies. The value of this latest exchange to General Atlantic has not been disclosed.
Unlike some of General Atlantic's earlier Internet investments, Network Solutions is not on the bleeding edge of e-commerce, but rather competing in a heavily contested space for SME Internet services ranging from domain registration to Web hosting to individual marketing and press release writing. Other consumer- and SME-oriented registrars such as Dotster and GoDaddy offer a virtually identical slate of services, along with major Internet brands such as Yahoo!.
General Atlantic believes there is still unrealized value in Network Solutions, however. "We see there to be tremendous continued opportunity as people migrate from offline marketing activities to the Internet," says Pat Hedley, senior vice president at General Atlantic. "There is tremendous interest from small and mid-sized businesses to establish and develop their online presence, and we believe Network Solutions is a leader in this area and will continue to deliver good growth going forward."
General Atlantic has signaled that it intends to keep the current management of Network Solutions in place as built by Najafi. "It will become clearer over time... but we think highly of the management team and have known [Network Solutions CEO] Champ Mitchell for several years, and we think he and his team have done a terrific job and expect them to continue to do that going forward," Hedley says.
