Struggling MarchFirst to get $150 million from investment firm

MarchFirst Inc., one of the many Internet consulting firms being wracked by financial problems, today said it will get $150 million in badly needed new financing through a cash-for-stock deal with a San Francisco-based investment and buyout company.

The agreement with Francisco Partners comes three weeks after Chicago-based MarchFirst said in a filing to the U.S. Securities and Exchange Commission that it needed to raise $100 million by early next year in order to pay its bills (see story). That admission was preceded by an announcement that MarchFirst was laying off 10% of its its 10,000 workers (see story).

A MarchFirst spokeswoman today said the company is trying to raise $50 million for its end-of-the-year bills and another $50 million for the start of 2001. She added that the $150 million deal with Francisco Partners, a $2.5 billion private equity firm that focuses on investing in technology vendors, is due to close this month.

Francisco Partners is buying both preferred stock and convertible preferred stock from MarchFirst under the agreement, according to the two companies. If all the stock is converted into regular shares, the investment firm would own about 32% of MarchFirst's voting stock. MarchFirst said Francisco Partners agreed not to buy any more shares without its consent.

MarchFirst is hardly alone in its struggles. At least four other Internet consulting firms have also laid off workers in recent weeks because of lower-than-expected financial results. For example, San Francisco-based Scient Corp. and Boston-based Viant Corp. both cut their workforces last week (see story).

In addition, iXL Enterprises Inc. in Atlanta and Luminant Worldwide Corp. in Dallas announced layoffs last month. Analysts said the demise of numerous dot-com companies has reduced the number of potential clients for Internet consulting firms, leaving a large group of competitors chasing a smaller amount of business.

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