According to a report from the Wall Street Journal (subscription required), private equity firm Providence Equity Partners agreed to buy a majority position in NexTag for roughly $830 million. NexTag is a top-notch comparison shopping site.

I had a chance to talk to Michael Yang, the CEO and founder of Become.com (a comparison shopping engine). He is also the founder of mySimon, a shopping comparison site that he sold to CNET Networks Inc. (NASDAQ: CNET) for $700 million in February 2000.

How are things with Become.com?

Things are going very well. We have grown at over 400% from last year Q1 to this year Q1 in terms of traffic and revenue. Our joint venture in Japan (Become Japan KK) is also going very well with similar growth in that market. We are now gearing up to launch major new features for the holiday shopping season.

There have been several waves of consolidation in the comparison-shopping space. Might we see another one? If so, why?

As consumers and companies find great value in comparison shopping services, I do expect there to be continued mergers and acquisitions in this space. Comparison shopping services provide a compelling user experience to consumers and high revenue and profit growth opportunities for companies and investors.

What's your take from the interest of private equity in the space? Is this part of a general trend of PE firms moving into tech?

I think it is a very good thing for the comparison shopping industry. There is a lot of opportunity for growth. And I think we'll see more M&A in this space in the coming years as private equity firms discover this space.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Traditionally, private equity firms have focused on mainstream businesses. But, we are seeing more and more deals in the tech sector. In fact, Google Inc. (NASDAQ: GOOG)'s buyout of DoubleClick was a sign that private equity can make a mint from tech.

According to a piece in The Wall Street Journal [a paid service], there's another important deal. That is, Providence Equity Partners has purchased a majority stake in NexTag for roughly $830 million.

Basically, NexTag is a comparison shopping site. And, yes, the space has been full of M&A deals over the past couple years -- such as Shopzilla, eBay Inc. (NASDAQ: EBAY)'s Shopping.com and so on.

Because NexTag is privately held, it's tough to gauge the revenues, but the rumor is that the figure is in the $200 million range. Thus, it looks like Providence is paying a hefty premium (at least by private equity standards).

My hunch is that this is a late-stage funding prior to an IPO or perhaps a sale to a major strategic player. But, this has historically been the role of VCs, not private equity firms. Yet with gazillions of dollars in the private equity space, we're probably going to see more unconventional deals.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

This morning's Wall Street Journal [subscription required] reports that Providence Equity Partners bought an $830 million stake in a privately-held Internet comparison shopping company. (Click here for my colleague, Tom Taulli's, perspective on this deal.) This could signal a top in the private equity cycle for two reasons:

• Private equity's loosening investment standards. In the past, a consistently profitable Internet company would be best off tapping the public markets in an IPO. NexTag's decision to take private equity instead of the IPO or corporate acquisition -- e.g., getting bought by Microsoft Corp. (NASDAQ: MSFT), Yahoo Inc. (NASDAQ: YHOO), or IAC Interactive Corp. (NASDAQ: IACI) -- markets suggests surprising weakness there, or a private equity market whose lax investment standards make it willing to pay more than public equity investors for NexTag.
• Scrambling out of the comfort zone. Providence Equity has typically made purchases of traditional media companies. Its move into the Internet business could either signal it no longer perceives that traditional media companies are worth taking private, that consumer Internet companies have greater appreciation potential, or that the hidden details of this particular deal were just too good to pass up. But NexTag's market is highly competitive (e.g., there are many competitors such as Lowermybills, Lending Tree, Pricegrabber, Bizrate, Shopzilla, and Bankrate) and these competitors must deal with significant business risks (such as changes in interest rates -- much of NexTag's business is mortgage related -- and disruptive technologies). It is unclear what unique sources of competitive advantage Providence Equity brings to NexTag as it faces these business challenges.

Providence Equity's deal appears to be a rich one. Its 66% stake in NexTag -- which operates sites in the U.S. and U.K. that allow 11 million consumers a month to find the best prices on products and services sold online by Web retailers -- values the San Mateo, CA company at $1.2 billion. NexTag's website claims that it operated profitably in every one of 15 straight quarters through July 2005. But in the absence of specific revenue and profit information it's difficult to know whether Providence Equity's price makes sense.