Business information directory and search enginame Business.com is for sale, reports the Wall Street Journal, and it may fetch as much as $400 million. Investment bank Credit Suisse is representing the company.
The domain name was purchased for $7.5 million back in 1999. Later, the purchase was widely ridiculed – in 1997 the domain was acquired for just $150,000.
Those were the days before CPC ads and parked pages, though, which brought the value of domains up exponentially. The risk paid off. Business.com now has EBITDA of around $15 million/year. A $400 million acquisition price is a 26 multiple on current profits, which is on the high end of current valuations.
The WSJ reports that Dow Jones & Co. and New York Times are likely bidders. Dow Jones, the parent company of the Wall Street Journal, “declined to comment” to the reporter, who also works for Dow Jones. I love those ethical walls.
Recent Comscore data below. Interesting that it was trending down and then had a huge recent jump.
Hey .. we hear many sites and products FOR SALE and AQUIRED …. !! …. whn is TECH CRUNCH gonna get acquired …or has anyone so far bidded on it ??? …. can you share this news with us ..and for how much ..
…… ( sorry for the spelling mistakes ..wanted ma reply to be de first 0 
It is really a big businesss.
http://www.usat...-bloggers_N.htm
Sell TechCrunch? And do what? Retire in Hawaii???
Allen Vartazarian
Famesource.com-claim your fame
http://www.famesource.com
I don’t think these buyers fully utilized value of the domain name itself
not much to the site. really the domain name is the key. good answer to question, what’s in a name?
question. is sex.com worth more than business.com?
If I would be Yahoo guy, I would buy this one. Reorganize, remove some useless stuff and that’s all. Then they would have 2 directories, where could promote each other, like get 10% discount or so when submitting to both, as many people submit to Yahoo/Business already but not awlays to both.
If only I had a time machine, would only need to put it back 10 years, go on a domain buying spree and get some cheap 16$ per share apple stock with a few other choice ones… I would be a billionaire right now! Anybody want to lend me their time machine?
Jon
@John. I’m working on a time machines and need a human to test it for me. It worked with my hamster..
Holy crap Mike… you scared me…
I had only read the post title in my RSS reader and I began having bubble flashbacks, yikes…
Luckily, a business is for sale – not just the domain.
-Aidan
http://www.MappingTheWeb.com
Yes, we could put this dot-com bubble time machine online and call it MyTimeWarpster.com.
Wow,
My M& A’s knowledge just got updtaed,
Thanks dude,
http://www.tekn...ld.blogspot.com
There’s a great article on business2.com about this guy who bought up like 300,000 domain names and is making a fortune with the revenue from ads. He even partnered with Cameroon to get all of the traffic to .com sites where people accidentally omit the “o” in .com addresses.
Mike, revenue is a little different than EBITDA, in which the article talks about.
WOWWW…. i cant say better than this just “WOW” internet is showing it’s strength & the potential to earn a fortune so people invest in domains … lol but all .com’s r registered already …hahahhhhhh….. i think i have to use the method of time machine lol is it available ??? for rent also i dont matter lollll
A LOT of sites getting sold/bought/acquired these days.
does sucker.com get thrown in w/ the purchase. and mike, your eagerness to bitch slap the MSM at every turn looks silly. “ethical walls” are not in play here. either their commenting to the press (including their own holdings) or their not. simple as that.
As you said Branson and KS, the question of the relative or compared value is essential. However sex.com and business.com are acting in different fields then a value would be built from the potentiel a name has or possess by itself. The other parameters are the established notoriety and also the final result : what this names will be used for and how that’s a ground which deserves thinking.
Anyway this kind of mix and the valuation case it represents (how to value the quintessence of immaterial capital) may give a headache to some finance prof. from harvard.
As you said Branson and KS, the question of the relative or compared value is essential. However sex.com and business.com are acting in different fields then a value would be built from the potentiel a name has or possess by itself. The other parameters are the established notoriety and also the final result : what this names will be used for and how that’s a ground which deserves thinking.
Business.com is essentially a directory, with each page heavily top-loaded with ads. An Alexa search shows it has significantly less traffic that TechCrunch or dozens of other sites. Sure, Alexa data is dubious. And folks who are searching a directory are more likely buyers than folks reading blogs.
But here’s the real question: Are these valuations based on the value of the domain? Or is the underlying business worth 26 times EBITDA? I wonder.
- 26 x / evaluation.
– Who knows what is going to happen for the next 26 years?
– so if you bought this / you would have to want to make back your money in 5 years … becuase that is all you can forecast.
– 400million is too much; Im thinking 120-130 …
Mike, your post says that the $400-million price would be 26 times revenue, but it’s actually 26 times EBITDA, which is free cash flow, not revenue.
Concrete Stain – your logic is way off.
You have to account for growth in valuations. High growing companies will grow into their valuations, which is why they justify a premium.
Also, this is 26X EBITDA, not revenue. Taking cash out of the business is rarely the short-term motivation of any likely buyer. Investing into it to build a long-term scalable business makes much more sense.
This is a good company with smart people that is growing quickly. This valuation seems reasonable.
You say that EBITDA is $15,000,000 but they are paying 26x revenue on $400,000,000. That means their revenue is $15.384million. Are their margins 98%?
couple of comments – Niki, EBITDA isn’t revenue, and the number I reported is what the WSJ referred to as “earnings before interest, taxes, depreciation and amortization.”
Steve, wasn’t bitch slapping MSM. If DJ is interested in the deal they certainly wouldn’t want this kind of press about it. In this case, the ethical wall caused an article to be written that probably wouldn’t have been otherwise. So it’s your issue, not mine.
Dow Jones is a likely bidder? Ha. The last thing investors would abide is a struggling company paying $400 m for a domain.
Is it still possible to make money off of parked domains?
It seems that if you caught the boat in the past you are lucky today.
How can the little guys/gals make money with domain names?
Thanks!
If high visibility domains like this are so “profitable”, why are they always up for sale?
The owner of the domain get writer’s cramp from endorsing all those checks from Google Ad Sense?
i friend just went to work for a company that ‘parks’ generic pages (based on the keyword that drove a user to the site) in empty domains for people who own the domain name. the amount of money this company makes almost made me fall over. this story is another example that ‘parking’ can be an unbelievably profitable enterprise (think of the margins). who would have thought?
obviously these guys did, but i sure didn’t. doh.
This site doesn’t have any staff, (or shouldn’t), it is just a domain name capturing traffic, and spoon feeding it google adsense ads (look at the links to any of their categories). The template and framework is valueluess. The company has no technology, no intrinsic value.
All they are doing is selling a google adsense (and a few other private sponsors, such as work.com) revenue stream they get from the clueless who type business.com into their browser.
Of course the clueless are very good earners for websites, hence their $15m in “EB” (I doubt they have any “ITDA” at all). All of their incoming traffic either leaves, or clicks an ad. Since most of their incoming traffic is clueless, most of it exits to a google ad paying them $1 on the way out.
So “business.com” name is trying to sell itself for some multiple of its current adsense value as an unoccupied domain? 4x revenue.. $60m (if the 15m number is really true and not inflated for the sale).
Business.com would be a much better place if they adopt the about.com strategy of “an expert topic” to evaluate search results into a better arrange page results, to differenciate themselves from a bunch of other search engines.
And the best company to be able to do that about.com parent The New York Times Company. I think it would be a good fit anyway.
I’m not a huge fan of Business.com – I’ve spent money with them and never been impressed with results. However, I don’t think these folks should be lumped in with domain parking companies. True, they do have a domain that probably gets a lot of direct traffic from folks typing in the domain, but they have also done a good job of getting search-related traffic (both organic and PPC) to specific areas of the directory.
Totally agree w/ the About.com comment from Sambay, though.
@ Sambay / Terry – they DID create the about.com strategy when they launched “Work.com” which I don’t know the success of.
We’ve used business.com PPC for years and it’s OK, just not much volume.
As a note, we get more traffic from Business.com PPC than we do from MSN AdCenter which is just scary.
We are a b2b site, but even still. It’s friggin MSN!
“A $400 million acquisition price is a 26 multiple on current profits, which is on the high end of current valuations.”
High end is putting it mildly. If you consider the yearly payment on a government bond as a near-equivalent to profit or EBITDA or cash flow, you would be paying a 20x multiple ($50 return on a $1000 bond). That’s for the most secure investment on a planet. You would have to be a brain-dead jackass cretinous moron to pay more than 10x EBITDA for any kind of acquisition, much less 26x. Any public company that actually falls for this crap should be shorted immediately.
How to make money with domains? Build a quality website people will trust, return to, and do business with.
People are getting more savy after seeing so many parked domains filled with ads. The click rates are going down. Parked domains is very passive income, but it is a one and done type of thing where nobody does a repeat visit. The guy in the Business 2.0 article who has 300,000 domains has figured this out and has started to hire people to start making quality web sites for his domain portfolio.
The only way busines.com is worth $400 million is if there is a good business plan behind it to create a quality site – not one filled with ads.
That being said – you don’t need a time machine. There are still some quality domains out there you can purchase and make into a quality site. Google is not a good domain name, but it became one because of the information people can find on that domain name.
I’d also be worried about that traffic spike. Its doubled pretty quickly. I don’t think any ad campaign was running during that time and even if it was its artifical traffic.
i don’t see business.com as anything substantial(400M) – atleast from a valuable user-base, that is.
if anything, it’s just a fancy, direct keyword landing page – if you will…with some sponsorship ads, etc etc
so, if i were a buyer, i’d pay a multiple of 10x – not 26x
@ Jack – If a company goes from $1m in sales on 10% EBIT – $100,000 you’re saying it should only be worth 10x, right?
If you compare the cash principal of $1m earning 10% in the market versus a company doing $1m in sales earning 10% per year, it’s not the same value.
The $1m will only be $1.1m after a year. The company has the potential to be $2m in a year. They are assets growing at different rates which is why the valuations are different.
That said, I’m not suggesting all companies are growing and stable, but it’s the chief consideration for a valuation multiplier.
I wouldn’t offer more $35m or $40m because the site needs extensively redeveloped which would cost millions.
I call bullshit – there is NO WAY that the site earns anything near this kind of revenue.
It is just another adsense hype.
It all about earnings i suppose, and future earnings?