It is just another adsense hype.

How much would you pay for Business.com? Well, the WSJ says it may fetch as much as $400 million. In case you are unaware of exactly what Business.com is, it’s a search engine/business directory. TechCrunch gives a little background on the site:…

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.

The Wall Street Journal notes that the business.com domain could fetch $300 million for owners Jake Winebaum and Sky Dayton, on a $7.5 million initial investment. Meanwhile, everyone is poo-pooing the thing.
Assuming what the Journal says is true and …

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

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.

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.

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!

Totally agree w/ the About.com comment from Sambay, though.

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.

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).

obviously these guys did, but i sure didn’t. doh.

The owner of the domain get writer’s cramp from endorsing all those checks from Google Ad Sense?

How can the little guys/gals make money with domain names?

Thanks!

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.

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.

Wow! WSJ is reporting business.com is for sale with a price tag as high as $400 million (via TechCrunch). From the article……

– 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 …