By Richard Morgan
Feburary 10, 2006

At $35 million, it wasn't anywhere near the year's biggest deal. But the fact that it took only 29 days - from selling decision to binding transaction - Joe Mansueto's acquisition of Inc. and Fast Company was by far the quickest.

"The short end for this sort of thing is normally three months, and the long end is six months," says Mark Edmiston, a managing director at AdMedia Partners Inc.

Edmiston knows just how fast this particular auction unfolded because Gruner + Jahr AG & Co. KG, after cutting a deal to sell its other U.S. titles to Meredith Corp., tapped his media- oriented investment bank to manage it. With the assignment, however, came a 39-day deadline.

After 27 years of trying to get big in the U.S. market. G+J USA's Hamburg-based parent company finally decided to get out. The global magazine publisher, of which German media giant Bertelsmann AG owns 75%, had chosen instead to focus on regions where it could achieve what it called "leading and profitable positions." Commenting on Gnmer + Jahr's retreat from these shores, board chairman Bernd Kundrun said in a statement, ''We no longer saw such a prospect for our magazine business in the U.S. and for that reason decided upon this sale."

That's where Meredith stepped in, expediting the exit not only by acquiring G+J USA's four consumer magazines - Parents, Child, Fitness and Family Circle - but by coming up with a contingency plan for the remaining two. For an extra $ 15 millions Meredith stood ready to take over Inc. and Fast Company when, at the end of June 2005, it was slated to close on its $350 million deal for G+J USA's other titles. The buyer then planned to turn around and sell the two business magazines itself.

That Meredith never had to shop the pair speaks to Edmiston's handiwork. To accommodate a dozen or so interested parties, AdMedia set up four offices for conducting due diligence: two at its New York headquarters, another at its lawyers' and a final one at soon-to-be-shuttered G+J USA.

AdMedia also put a book together that, two weeds into the auction, elicited 10 first-round bids. Edmiston and crew then pared this list to five: Abry Partners LLC, Advance Publications Inc., Alta Communications, the Economist Group and Morningstar Inc. founder Joe Man- sueto. With two strategic bidders, two financial ones and a hybrid going into the second round, the auction appeared typical, even if its timetable was not.

Much less typical was the importance accorded each asset in the two-title portfolio: Three of the five finalists would likely have closed Fast Company, on life support since the Internet bubble burst, had they won it. The only known exceptions, in fact, were the Economist Group and Mansueto, whom Edmiston brought into the contest after dealing him a 50% stake of Time Out Chicago the previous year.

"The fate of Fast Company was a priority," Edmiston says, "but it wasn't as high as a bidder's ability to close on time."

This race to close wound up working in Mansueto's favor. An entrepreneur of the sort celebrated in Inc., on whose cover he had been featured, Mansueto was outbid by $2 million in an eleventh-hour offer from the Economist Group. Yet G+J agreed to overlook the price discrepancy, provided Mansueto immediately make his standing offer of $35 million binding.

This he did, while attending a mutual fund conference in a Chicago hotel, according to Inc.'s own account of the sale. Using the hotel's business center, Mansueto downloaded a copy of his letter of intent and changed each "not binding" phrase to "binding." He then faxed a signed copy to G+J's Paris-based president, who in a follow-up phone call said, "We have a deal."

For the magazines' employees, at least, it's hard to imagine a better one. Inc. and Fast Company collectively lost $10 million in 2005. Mansueto expects similar losses in 2006 and 2007 before achieving profitability in 2008. "He's comfortable with it," Edmiston says of the auction's winner. The seller is comfortable, too, having beat its drop-dead deadline by l 0 days and its default sale price by $20 million. But what really makes this a deal of the year is that it spared Fast Company what could have been a quick demise.