Why has the chief of Criterion Capital Partners bought Poolworks, as the firm is known these days? Good question. And the whole story of why it’s taken this long to confirm the identity of the new owner is just plain weird.

Let’s take a deep breath…

Back in June, VZ Networks – the ailing proprietor of Facebook clone StudiVZ and other networks aimed at various demographics – rebranded as Poolworks and announced it would be focusing on its school-age system SchülerVZ, also rebranded as IDPool. (That new site is still only a ‘coming-soon’ affair.)

Then, in September, Poolworks owner Holtzbrinck Ventures surprised everyone by selling the company to the ‘international investment organization’ Vert Capital. You know, Vert? No, me neither. Anyway, Poolworks CEO Stefanie Waehlert was out and almost everything went to Vert, with Holtzbrinck retaining the option of ‘using’ SchülerVZ/IDPool.

Bebo was rumored to be behind Vert, but no-one would confirm it. Meanwhile, nailing down an online presence for Vert – or indeed any references to the company – proved to be very tricky. Then Der Spiegel reported that Levin was the mystery buyer, saying he had kept his identity secret because of an ongoing lawsuit against Bebo by Walker Digital over in the U.S.

That would be the same lawsuit (PDF) in which two patents, supposedly covering functionality such as privacy settings, were asserted against co-defendants Facebook, Google, LinkedIn and MySpace. If this really was a factor, Levin presumably thought Walker Digital would try pulling his new property into the suit if it found out he’d bought it.

All of which brings us to today. Walker Digital must have ended its suit, or be about to, because Levin has finally gone public, in a way. As the eagle-eyed folks over at Deutsche Startups have spotted, the Poolworks properties now list as their authorized representatives Adam Levin, Joseph Nejman and Mike Pope.

At least two of these guys are Criterion Capital men – Levin’s the MD and Pope’s the CFO. So what the heck is going on?

“Vert Capital is its own entity and Criterion is a separate entity,” the spokesman who handled the original announcement of the Poolworks takeover told me on Friday. “People were saying Bebo bought this, but Bebo did not purchase VZ Networks. There’s overlap in terms of personnel, but there are two different capital structures, two different sets of investors.”

“Now, will they look at any kind of synergies based on the fact that Adam owns stakes in both? Perhaps, but at the time it was very much overblown.”

So, does Vert Capital have any other activities, apart from running Poolworks/VZ Networks? “A few”, apparently, and we should look out for announcements of those “shortly”.

I have a feeling we’ve not heard the last of this tale. Here are my outstanding questions:

• Was the patent suit really the reason for all this secrecy?
• Are the Poolworks properties going to be merged with Bebo?
• And last but not least, what on earth is happening with Bebo anyway? Seriously, the last thing coming out of Bebo that I can find is a post thanking fans for generating 100,000 likes on, um, the site’s Facebook page.

The social network went offline Monday night, prompting this from Michael Birch…

Am super sad that Bebo has actually gone. Some very fun times with very cool people. #RIPbebo – keep sharing that luv!

— Michael Birch (@mickbirch) January 30, 2012

But, through the site remains offline, a spokesperson for Criterion Çapital Partners (CCP), which acquired Bebo from AOL (NYSE: AOL), tells paidContent:

“They were doing an aggressive set of updates that put the site down and they are working to get it back up. They definitely are not going out of business – they actually have continued to reinvest in the platform.”

The company is profitable, the spokesperson said.

Hold the press (too late for that), Bebo should be coming back in a matter of hours. #LongLiveBebo

— Michael Birch (@mickbirch) January 30, 2012

AOL bought Bebo from Birch and co-owners for an over-the-top $850 million. Since being sold to CCP, Criterion has slowed but not reversed Bebo’s traffic decline. It enlisted Hi5 co-founder Akash Garg and Xbox co-founder Kevin Bachus as it set about re-investing in technology upgrades, while Birch returned to re-invest and act as an advisor. It has also redesigned.

SeeSaw, the UK VOD service which CCP bought a majority of in summer 2011, recently went offline.

The service is actually being bought by a consortium comprising Criterion (which will take the majority), together with financial funds and Hollywood investors including ex InterActiveCorp programming head Michael Jackson (a former BBC executive), who will be chairman, and ex Walt Disney (NYSE: DIS) Imagineering president Dan Adler (who ran for Congress this year). But SeeSaw owner Arqiva, best known for running terrestrial broadcast transmitters, will retain a stake.

SeeSaw’s management team, including controller John Keeling and commercial director Matt Rennie, will stay with the service, including the majority of its 28 staff. SeeSaw had been due to shut on June 20 after Arqiva earlier announced it was seeking strategic options, but remained open when buyer interest emerged. So this means no interruption for SeeSaw’s users, which numbered 900,000 in May.

SeeSaw shows BBC Worldwide, Channel 4 and Channel 5 shows and launched early in 2010 after Arqiva bought the technology assets of Project Kangaroo, the proposed BBCWW/C4/ITV (LSE: ITV) VOD JV that was struck down pre-launch by UK competition authorities on antitrust complaints, despite millions in development costs.

Though, under Arqiva, SeeSaw has struggled to profit from either a hefty volume of pre-roll ads or an alternative subscription video model, that technology, built by Ioko, is still reckoned to be sound, and capable of scaling.

The Hollywood executives on Criterion’s contacts list suggest some kind of roll-out State-side, but it is not yet known whether that will mean deploying the technology alone or will go as far as a full SeeSaw U.S. launch – something that may require a rights and would put SeeSaw up against Hulu.

Nor are there yet thought to be any firm plans to link SeeSaw with Bebo, which, under Joanna Shields, launched its own grab to host TV material and produced its own sponsor-funded original shows.

Since purchasing Bebo, Criterion has made a number of big-name hires who have promised to add new features to the site. Just this week, Bebo rolled out a new video chat feature.

Criterion, however, has always said that a goal was to sell Bebo again, and GigaOm reported last week that a “large media company” was interested in buying it. Birch’s investment, however, would seem to suggest that — for now — those talks are off.

Since selling Bebo, Birch has been a prolific investor. He launched a digital media fund focused on Europe in July 2009 called PROfounders Capital. It has backed a number of startups including CitySocialising, TweetDeck and Made.com. He is personally an investor in a number of other startups, including Eventbrite, Scoopler, PlayFire and Mixpanel.

In a short interview, Garg, who left Hi5 last summer, said he had been working with Sandersen on “some startup ideas” prior to deciding to join Bebo — and that he was now thinking of Bebo “as a startup.”

“We’re [going to be] working super fast on new features and iterations,” he said. Levin outlined some of the areas that Bebo was planning to concentrate on — including mobile — in this interview with my colleague Robert Andrews last month.

You might usually expect a turnaround specialist to cut costs and lay off staff. But, in Bebo’s case, the cutting had already been done by AOL (NYSE: AOL) — the site now has only 25 to 30 staff, and now Criterion will need to re-invest, particularly on engineers, Levin tells paidContent:UK.

“AOL left Bebo somewhat dormant, so we will be staffing up, we’ll be announcing several new key hires in the coming weeks.”

Bebo will be moving its San Francisco global HQ from AOL’s Folsom Street office to new premises at the Embarcadero this weekend, a switch Levin says will provide existing staff with “a new start”. “Outside of the US, we will still have staff – we wont be shutting offices – we’ll just be moving (UK) offices from the AOL office.”

So what’s the future for Bebo run by a merchant bank?

Levin points to Facebook’s blossoming from an Ivy League sideline in to a mainstream network. “AOL looked to replicate much of that (in Bebo) and have a similar strategy. But we have really strong niche user groups that allow us, from an advertising perspective, to reach a specific targeted group.”

Levin rejects the suggestion that the social networking game is over, won by Facebook, pointing to Bebo’s differentiator: “Tween is our core demographic. It allows a tween or user an opportunity to create a customisable experience, as opposed to a Facebook, where they can interact with their friends. A 14-year-old may not have the opportunity to customise their house or buy the car that they want, but they can select their Bebo layout in the way they want to see it.

“Advertising will be the main revenue driver. There are also other opportunities that Bebo, under AOL, didn’t look at. We’re looking at increasing gaming, doing social currency.” And Levin brushes aside the suggestion that advertising on social networks is proving too difficult, saying “CPMs are lower than many expected across the board” and expecting that demographic targeting can inflate those prices.”

Levin won’t say how much Criterion paid for Bebo, just: “All of the needs of my investors in Criterion were met, as well as the needs of AOL — it was a win-win.”

“The new ownership structure gives us the ability to be aggressive in innovation and create a platform that’s going to be engaging to users,” says Levin, who was previously CEO of mobile video distributor CinemaElectric.

“We’re striking a bunch of deals out of the gates. Several different partnerships to enhance the functionality. Based on my background in mobile, we have been able to sign several deals that will enhance the footprint that Bebo has today dramatically over the next 60 to 90 days.”

Mobile sounds like a big focus now. “AOL had no mobile advertising (on Bebo), yet was seeing 200 million impressions on mobile monthly. There are some low-hanging fruit on the monetisation side.” We expect a deal with a big mobile advertising network, as well as amping up in-house mobile ad sales.

“We’re actively looking and talking to people about other properties that could add strategic benefit to Bebo.”

Bebo under Criterion is keen to stress a long list of numbers it says remain high – 1.2 million daily users, 52.4 million people have created a profile or visited in the last year, a quarter of whom are in the US. But Bebo’s traffic, along with MySpace’s, has been falling over the last year and Levin acknowledges some effort must be made to bring those users back. The site will run a “Free Love Day” in the UK next week as some kind of embrace for users there.

“Bebo’s a great platform today – we have an incredible user base,” Levin says. “There are lots of naysayers who say it has declined, but it allows users to have a tremendous amount of self-expression.”

Criterion’s portfolio numbers a startup charter school, a commodity goods manufacturer and a specialty jewelry chain but it’s media and tech background is limited beyond Levin, so he’s brought aboard online ad industry veteran Richard Hecker and partner Paul Abramowitz, who once helped sort out Enron’s post-collapse debt.

And if Criterion does manage to get Bebo back on course, what then? On his own role, the company’s manager says he’s the best man for the job right now but acknowledges: “There may come a time when someone more qualified or has certain attributes that I can’t contribute – so we’re open to anything and not ruling a change out at any time.”

And, naturally, Bebo may yet be sold again in future: “We are a merchant bank, a private equity fund – so we do look for deals that will return money to our investors at the end of the day. So we will be looking for a liquidity event at some point, but not for now.”

AOL (NYSE: AOL), whose CEO Tim Armstrong told staff Criterion Capital Partners will buy “substantially all of the assets”, is hanging on to Bebo’s office inside the six-storey building on 795 Folsom Street, we have learned from the company.

“The property will remain part of AOL’s portfolio of assets immediately post-sale and will continue to house the Bebo team for a period time,” a Bebo spokesperson tells paidContent:UK.

Will staff levels be reduced in the sale? “We anticipate that the new owner will extend offers of employment to as many of the existing Bebo employees as possible,” the spokesperson said. “We cannot be more specific than this at this time.

“As part of our earlier conversations with employees about this process, we committed to providing all Bebo U.S. employees a severance package regardless of the outcome of this strategic review.

“We did this to encourage employees to remain with Bebo until an ultimate decision was reached. The packages mirror the terms of AOL

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Maybe that’s a bit rich.

AOL’s merger with Time Warner (NYSE: TWX), which Case brokered before stepping back from the company and before AOL (NYSE: AOL) was divested recently, must rank at least equal with AOL’s later, $850 million Bebo acquisition on the “ill-fated” scale.

»  Updated: AOL May Finally Have A Bebo Solution

» 

The deal gives it no significant industry partner or parent with which it could hope to resurrect itself.

A sale to the Criterion Capital Partners fund, which specialises in turning around underperforming companies, is as good as being placed in to rescue administration.

Such turnarounds inevitably focus on getting companies back on their feet through cutbacks and restructures. But, in Bebo’s case, there’s nothing left to restructure – AOL (NYSE: AOL) has already decimated the company staff over the last year, from the exec level to the developers.

At least a sale to a relevant media player – like MTV, someone who could have absorbed the best bits of Bebo’s pop culture-oriented networking schtick for its own digital program – might have resulted in a clear and definite way-ahead strategy.

But the sale to private equity effectively puts Bebo in a holding pen, for a further period of uncertainty, while Criterion figures out what to do and how.

In this case, a re-sale to the significant player that Bebo needs could still end up happening.

But, if it’s hard to see how Criterion, which recently replaced its whole website with just a company logo, could turn around a standalone Bebo, it’s harder still to see what new tricks it could bring to the site that might attract buyer interest for a future off-load.