Cheddar ‘No Money Down’ Sale Suggests Way of Future

Here’s a private equity firm you may hear more about next year: Regent. It appears to have developed a specialty in acquiring distressed assets, as financiers call businesses that are struggling to survive, without paying anything for them upfront. Regent has struck a series of deals this year in which it has taken a weak business off the hands of a big company on deferred payment terms. Regent doesn’t have to write a check to get control, but the seller may get money over time—or not, depending on how the business performs. 

We saw the latest such deal today, when Cheddar announced Regent’s media arm, Archetype, had acquired it. Former BuzzFeed executive Jon Steinberg launched Cheddar—something like CNBC for young people—in 2016. He sold it to cable operator Altice for $200 million in 2019. But things didn’t work out. And according to a CNBC report, the sale of Cheddar is structured as an earnout, whereby Altice will get money in the future if Cheddar meets certain targets. This follows two other such deals Regent has done this year. In March, Regent bought an online learning business from U.K. publisher Pearson on deferred teams. Pearson said it is getting a cut of the online learning unit’s earnings over the next six years. In May, Regent bought online retailer Zulily from Qurate Retail Group, part of cable mogul John Malone’s empire. The announcement implied that no money had changed hands, and I hear that purchase was also structured as an earnout.