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Rumor Mill:Jon Miller Raising Yahoo Buyout Fund?

rumorsNext  to Jerry Yang, Steve Ballmer and Carl Icahn, few names have been mentioned more frequently in Yahoo’s ongoing survival story than Jon Miller.  The partner at Velocity Interactive, and former AOL chief (2002 to 2006) was mentioned as an adviser in the failed Micro-hoo combination.  In Carl Icahn’s proxy fight he was expected to be a Yahoo board appointee until blocked by a non-compete.  Presently, he’s among the leading candidates in the press to assume the Yahoo CEO position.   And now, he’s also rumored to be a buyer.

The Wall Street Journal, citing sources “familiar with the matter,” is reporting Jon has been “sounding out” private equity and sovereign wealth funds for months, all in an effort to raise a buyout fund to takeover Yahoo.

The deal being pitched, the WSJ story writes, is a potential acquisition in the rage of $20 to $22 a share.

Is Jon Miller really looking to assemble as much as $30 billion in this market to acquire Yahoo?

It’s certainly possible.  Any rumor that passes through the editorial filters and finds its way onto the pages of A-list publications like the WSJ usually has to pass the sniff tests of plausibility.  Even so, plausible and probable are sometimes far apart….like here.

A Miller led buyout at this time just doesn’t seem likely.  While he probably does have the credentials, clout and relationships to assemble the financing and he definately has the know-how to structure a deal, Miller’s fundraising efforts are more easily explained in the context of his venture fund.

Velocity Interactive was originally formed by Miller and former Fox Interactive notable Ross Levinsohn with the support of private equity firm General Atlantic in August 2007.  The expectation was the firm would launch as a media centric roll-up fund. 

Just few months later, however, Ross Levinsohn and Jon Miller merged Velocity’s services with Com Ventures.   The deal attached more than $1.5 billion in assets and three more partners: David Britts, Keyur Patel and Roland Van der Meer.  It also focused the form more narrowly to venture capital.

In December 2007, Levinsohn said VIG was planning to raise another round of financing from limited partners in 2008. 

By most accounts, that fund raising process has not been completed.  The reported talks with sovereign wealth funds and other potential investors theoretically attributed to a Yahoo buyout could easily fit the firm’s previosuly affirmed fund raising efforts.

Adding to that prospect, some sources indicate VIG may have designs on expanding their footprint to include more of their original plan – private equity. They could well be trying to raise capital to broaden their investment focus to includes both a venture portfolio and more traditional private equity buyouts and roll-ups.

These days, Yahoo rumors are more common than theories about the Beatles arrival on iTunes (which are, incidentally, stalled at this time according to Paul McCartney).   If you follow Yahoo, you’ve got to pay attention and at least take notice to the loudest, or most plausible of chatter.    Generally, though, the simple answer is more often than not, the right one.

One thing to remember, Jon Miller was blocked from joining Yahoo’s board because of a non-compete agreement.  That contract reportedly doesn’t’ expire until March.

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