Investment firm buys controlling interest in Ancestry
Lots of reader questions coming in to The Legal Genealogist in the last few days all focus on one issue: “What do you think of the sale of Ancestry?”
The questions come from the announcement this week that Blackstone — a New York-based investment firm — had agreed to buy a 75% stake in Ancestry from other investment firms, Silver Lake, Spectrum Equity and Permira. The other 25% will continue to be held by GIC, an investment fund based in Singapore.1
So… what do I think of the buy-out of some investment company interests by other investment company interests?
Not a single darned thing… until and unless we see if the outcome is a shift in focus by the new controlling interests.
First off, there’s nothing any individual Ancestry subscriber can do about this kind of big money ownership. It’s a fact of life in the business world these days, and genealogy is big business. If we want to use the resources of a company like Ancestry, we’re accepting the simple reality that the owners are going to be big financial firms whose one and only interest in us is how much we’re willing to pay.
Oh, sure, we can end our subscriptions, pull our DNA test results, and break off all connection with Ancestry. But why? Because one big business interest bought out another big business interest? The new buyers here have been big investors in things like Hilton.2 I’m not going to switch hotels because of that.
Secondly, there’s an enormous amount of inertia in the operation of any business, and the bigger the business the more powerful the tendency not to change things. Changing course — even for the better — is hard and takes time and significant effort. Since Ancestry today has and for the foreseeable future will have a ton of features I want to use in my research, I’m not going to do a thing differently than I do today.
Now… that’s not carte blanche to Ancestry or to any company taking my money to disregard my needs and those of my fellow researchers as we move forward. If we should see a course change, for good or for ill, we can decide at that time what we can and should do in response. I certainly hope things might improve, in which case I’ll offer thanks and kudos. If they should begin to change for the worse, I’ll decide then what action I might be able to take as a subscriber, including walking with my dollars.
But in the meantime, what do I think about the sale of Ancestry?
I think it’s business as usual.
And — for now — I’m not changing a thing in my own business dealings with Ancestry.
Cite/link to this post: Judy G. Russell, “Business as usual,” The Legal Genealogist (https://www.legalgenealogist.com/blog : posted 7 Aug 2020).
SOURCES
- See e.g. Chibuike Oguh, “Blackstone to acquire Ancestry.com for $4.7 billion,” Reuters.com, posted 5 Aug 2020 (https://www.reuters.com/ : accessed 7 Aug 2020). ↩
- See Wikipedia (https://www.wikipedia.com), “The Blackstone Group,” rev. 5 Aug 2020. ↩
As I recollect, I think this is about the third time Ancestry has been “sold” in the past 5 years or so.
Venture capital raised in 1999. Publicly traded in 2009. Bought out by private equity groups in 2012. GIC and Silver Lake bought in, in 2016.
Great article! This has been my own thinking , business as usual. So many people in genealogy circles, groups facebook in particular are over reacting over thinking this and the gossip mill and assumptions are running WILD. Thank you for a very clear cut simple to understand article.
My problem is that Blackstone co-owner is a Trump supporter and owns Motel 6. Motel 6 was fined for providing a list of all of their Hispanic named guests to ICE. If they did that for Trump what will they do with our information.
I realize that Ancestry has bern sold many times and I investigated each company that purchased them. This is the first time the new controlling interest owner has raised red flags.
(cynical mode on) Darned few rich venture capitalists aren’t supporting a regime that provides tax and other breaks to rich venture capitalists. Whether they do it publicly or not. (/cynical mode off)
Thank you for being a voice of sanity among all the Chicken Littles!
“But but but… one bunch of venture capitalists is replacing another!!!! The world is coming to an end!!!” 🙂
As an Ancestry insider [non-trading], the presentation by Blackstone yesterday to the employees about their vision for the future of Ancestry was both visionary and encouraging.
Good to hear, Warren.
The corporate people are interested in making money and dont really care about the average subscriber. Look for less assistance increases in costs and generally less services
One of the usual themes that I see is a concern about who’s going to own “my” DNA in the new set-up. But does the concept of “ownership” of DNA even make sense? If I owned it, I could – perhaps – patent it, copyright it or trademark it. Can I do any of those? (though the answers might change across the world). So do I, does anyone, really *own* it?
(To be clear, I’m not talking about right to use it or the privacy of it…)
Actually… there are patents that have been issued on DNA material…
Really? Well, that might rather alter things – though I’m still unclear what intellectual effort I put into my DNA?!
You can’t patent it simply because it’s yours — you’d have to show some particular use no-one before had identified. (That’s what was done with the BRCA breast cancer genes.)
“The Immortal Life of Henrietta Lacks” is a fascinating read.
“Business as usual” applies only if the timeline is followed strictly.
But we are having our 6-7cM matches removed. That part of business was not as usual and looks like a reduction in cost base was effectively a condition of sale.
I am not saying that is improper, but it has already changed the way I do my own DNA searching.
The new owners need to recoup their investment, and will surely need to make changes over time to achieve that. They may not FURTHER affect our DNA searching for family. But there will certainly be changes of some kind to enhance profitability. Am I going to do anything more due to the change in ownership?
Nothing more than I already have for the 6-7cM loss. In that I agree with you.
Many companies find that the best way to improve profitability is to provide better products and services for their customers. The cost-cutting approach only works well in mature industries where there is little opportunity for growth.
Having gone through much smaller-scale acquisitions both as the buyer and seller, the odds that Ancestry’s DNA changes have anything whatsoever to do with the sale are pretty much non-existent. Blackstone clearly wants to grow Ancestry and then sell to someone else down the road.
Plus the upcoming Ancestry DNA changes should make for a great improvement in the service. Such improvements are indeed business as usual for companies that want to keep their customers’ business.
Michael, I have been through several acquisitions and have seen things from both sides. From the acquiring side, I have seen how both R&D, maintenance and inventory are often run down by the target before a sale, just to cut costs.
In one case I was able to review such factors before the sale was finalised, and advise that the sale price should be adjusted for the investment that would be required to restore functionality in such areas.
When I terminated my Ancestry subscription recently, I informed them that the outstanding reason I and colleagues had a subscription at all was to make sense of these small matches, which were important to understanding our family structures. Thus, for me and people like me, this move is contrary to Ancestry’s profitability.
But I agree with Peter that the market is mature: Ancestry is so dominant that the usual market forces no longer operate. I might be able to research documents elsewhere, but AncestryDNA dominates matching.
The voice of reason as usual! 🙂