Enom 2013 Annual Report Download - page 35

Risks Relating to the Proposed Business Separation
The proposed separation of our business into two distinct publicly traded companies may not be completed on the terms or timeline currently
contemplated, if at all.
Our wholly owned subsidiary, Rightsi de, filed a Registration Statement on Form 10 with the SEC in January 2014, which it amended in
February 2014, in connection with the planned separation of our domain name services business from our content and media business, including
the planned spin-off of Rightside as an independent publicly traded company. The Proposed Business Separation could be delayed or negatively
impacted by a number of factors, including delays related to the filing and effectiveness of appropriate filings with the SEC, delays in receiving
regulatory approvals, the need to complete further due diligence as appropriate and changes in market conditions. In addition, our board of
directors may, in its absolute and sole discretion, decide at any time prior to the Distribution not to proceed with the Proposed Business
Separation or to change any of the terms related to the Proposed Business Separation and Distribution. Therefore, the Proposed Business
Separation may not be completed on the terms or in accordance with the timeline currently contemplated, if at all. Any delays in the anticipated
completion of the Proposed Business Separation may also increase the expenses we incur in connection with the transaction.
The Proposed Business Separation requires significant time and attention of our management, may distract our employees and will require
us to incur significant expenses, each of which could have a material adverse effect on us.
In connection with the Proposed Business Separation, we are actively considering and pursuing strategic, structural and process actions
and initiatives for both businesses. Execution of the Proposed Business Separation requires significant time and attention from management,
which m ay distract management from the operation of our businesses and the execution of other initiatives. Our employees may also be
distracted due to uncertainty about their future roles with us or Rightside following completion of the Proposed Business Separation. The
Proposed Business Separation could therefore lead to disruption of our ongoing operations; loss of or inability to recruit key personnel needed to
operate and grow the businesses and complete the Proposed Business Separation; weakening of our internal standards, controls or procedures;
and impairment of our relationship with key customers and suppliers, among other things. We also expect to incur significant expenses in
connection with the Proposed Business Separation, consisting primarily of legal, accounting and advisory fees. Any such difficulties could have
a material adverse effect on our business, financial condition and results of operations.
The combined value of our common stock and Rightside common stock following completion of the Distribution may not equal or exceed the
pre
-Distribution value of our common stock.
Following the Distribution, if it is completed, our common stock will continue to be listed and traded on the NYSE and Rightside
common stock is expected to be listed and traded on a stock exchange. The combined trading price of our common stock and Rightside common
stock after the Distribution, as adjusted for any changes in the capitalization of us or Rightside, may be lower than the trading price of our
common stock prior to t
he Distribution. We expect to incur significant expenses in connection with the Proposed Business Separation, including
legal, accounting and advisory fees. Additionally, the prices at which our common stock and Rightside common stock trade may fluctuate
significantly, especially while the market is evaluating the two companies separately, depending on a number of factors, many of which are
beyond our control. Further, shares of our common stock and Rightside common stock will represent an investment in two smaller separate
public companies. These changes may not meet some stockholders’ investment strategies or requirements, which could cause investors to sell
their shares of our common stock or Rightside’s common stock. Excessive selling could cause the relative market price of our common stock
and/or Rightside common stock to decrease in advance of or following completion of the Distribution.
If the Distribution is completed, our operational and financial profile will change and we will be a smaller, less diversified company than we
were prior to the Distribution.
If the Distribution is completed, we and Rightside will be smaller, less diversified companies focused on the content and media business
and the domain name services business, respectively. This narrower business focus may leave the companies more vulnerable to changing
market conditions, which could materially and adversely affect their respective business, financial condition and results of operations. In
addition, the current diversification of revenue, costs, and cash flows will diminish following completion of the Distribution. As a result, it is
possible that our results of operations, cash flows, working capital and financing requirements may be subject to increased volatility.
Following consummation of the Proposed Business Separation, we and Rightside will continue to be dependent on each other for certain
support services for each respective business and may have indemnification obligations to each other with respect to such arrangements.
We expect to enter into various agreements with Rightside in connection with the Proposed Business Separation, including a transition
services agreement (the “Transition Services Agreement”), a separation and distribution agreement, a tax matters agreement
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