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July 26, 2007

Business.com Sells for $350 Million

Nick Gonzalez

53 comments »

Business.com has closed another chapter in its long journey from a $7.5 million million domain name bought on a hope and a prayer, selling to RH Donnelley for $350 million (WSJ reporting up to $360 million). RH Donnelley beat out Dow Jones and the New York Times during the bidding. The site had been on the block since late June and drew a lot of attention for outlandish valuations that turned out to be closer to the truth.

The buyer, RH Donnelley, is a directory and online local commercial search company. They are responsible for several white and yellow pages directories across the country. Business.com has turned into a business search directory, so the synergy between the two directory sites seems straightforward. The site also received a huge bump in traffic starting back in February according to ComScore.

The property reportedly had an EBITDA of around $15 million/year. While previous speculation framed the sale multiple of 25 times EBITDA ($400 million), it finally sold for around 23 times. The sale is about 47 times the $7.5 million 1999 purchase price. However, since the sale was in stock, the cash value reportedly shrunk to $2 million upon its later redemption.

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This entry was posted on Thursday, July 26th, 2007 at 2:47 am and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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Comments

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  1. David Krug

    July 26th, 2007 at 3:08 am

    Wow 25 times is a big number.

  2. 80s.mobi

    July 26th, 2007 at 3:25 am

    …so is 23

  3. Search*Engines WEB

    July 26th, 2007 at 3:26 am

    http://online.wsj.com/article/.....78568.html

    Wall St Journal has an interesting article with a little more perspective

  4. Frostfirebuzz.com

    July 26th, 2007 at 3:50 am

    $7.5 million to $360 million in 8 years is pretty good going!

    chris @ http://www.frostfirebuzz.com - Internet News

  5. Internet Evangelist

    July 26th, 2007 at 3:55 am

    Looks like the Business of running Directories is again rising.
    There has not been much hype around directories lately particularly after the meltdown of the Paid Y! directory and DMOZ’s own problems and inefficiencies.

    Are there any blog posts on the business of running niche or horizontal directories?

    Cheers

  6. ITPD

    July 26th, 2007 at 4:29 am

    Again web is shifting from content value to links value with the web2.0 market soon to collapse.

  7. Matt Keegan

    July 26th, 2007 at 4:33 am

    Simply amazing! Although the average webmaster may not own a pricey domain, everyone should consider whether their domain has worth beyond the average market price. I know that one word domains can sell for a mint, but easy to remember two and three word domains could still fetch a premium price.

  8. Michael Vu

    July 26th, 2007 at 5:33 am

    Virtual real estate, how sweet it is.

  9. Reed

    July 26th, 2007 at 5:46 am

    Well that’s a colossal waste of money.

  10. John Pachecus

    July 26th, 2007 at 5:53 am

    $350 million.. is a lot of money.

  11. CVOS Netpaths

    July 26th, 2007 at 6:06 am

    Business.com has built a quality directory that rivals the yahoo directory in the business niche. A savvy company will be able to monetize this site well into the future.

  12. Keith Schilling

    July 26th, 2007 at 6:07 am

    See, with a little hard work, a nice domain name, a business directory can be quite profitable.

  13. Scott Yates

    July 26th, 2007 at 6:11 am

    “been on the chopping block”

    I think you mean “on the block” which is derived from being on the “auction block,” derived from the platform used in auctions.

    “Chopping block” would imply that it is being cut up into smaller companies and sold, but that doesn’t appear to be the case.

    Not trying to be the grammar police,

    Just trying to help clarify,

    I remain,

    Your humble typist,

    -Scott

  14. Jimmy

    July 26th, 2007 at 6:17 am

    WOOHOO Thats a lot of money

  15. heri

    July 26th, 2007 at 6:18 am

    this is ridiculous - there is now way they recoup the price paid for that domain.

  16. Wes

    July 26th, 2007 at 6:33 am

    If you can pay so much for a domain then it must be very valuable but the price still looks very high.

  17. KindAndThoughtful

    July 26th, 2007 at 6:43 am

    Thank you for this interesting post. This topic would make a great case study for business schools.

    By the way, I also want to thank all the readers of TechCrunch for their intelligent and civil comments. It is always a great read.

    Take care everyone.

  18. Adrian Keys

    July 26th, 2007 at 6:52 am

    At just over 23X, given the pace at which good domains have appreciated in recent times, is probably an excellent deal. Don’t forget that this is actually 2 businesses in one…the domain name itself and the online business.

  19. flickrModels

    July 26th, 2007 at 7:05 am

    big jump! 7mil to 350mil

  20. wrs

    July 26th, 2007 at 7:07 am

    Just curious… what’s worth more — a Van Gogh or Picasso or a twelve-character long internet address?

    It’s really ridiculous.

  21. Techticles

    July 26th, 2007 at 7:27 am

    It would be interesting how many years before these guys get an ROI and what they do to shorten the lenght. At $15 million a year IBITDA, it would be great if they take 10 years ROI out of the site.

  22. Richard Miller

    July 26th, 2007 at 7:29 am

    you can say that again!

  23. Don

    July 26th, 2007 at 7:32 am

    Hey, the twelve-character long internet address may just make you enough cash to buy a few Van Goghs and Picassos…

    I’d just hate to be the original seller now.

  24. You Mon Tsang

    July 26th, 2007 at 7:57 am

    23x in a mostly stock deal. Seems fair to me.

  25. D Kim

    July 26th, 2007 at 8:11 am

    Overpriced!

  26. the buxr widget

    July 26th, 2007 at 8:16 am

    7 million for a domain looks like a bargain.. Sheesh! I guess 5 million for SEO.com is a good investment :)

  27. Toni D.

    July 26th, 2007 at 8:17 am

    The sale was not that impressive. Considering the amount of funding that went into this company, the returns are not that impressive!

    http://www.bizorigin.com/2007/.....ge-payday/

  28. Louis

    July 26th, 2007 at 8:24 am

    How much funding went into the firm? It wouldn’t have been that expensive to run.

  29. BlogReader

    July 26th, 2007 at 8:46 am

    Techticles At $15 million a year IBITDA,

    What does IBITDA stand for?

  30. slike

    July 26th, 2007 at 8:50 am

    what a waste of money. As if simply owning a good domain somehow guaranteed the road to riches.

  31. Jim

    July 26th, 2007 at 9:01 am

    Nick,

    Do you really think business writing is your thing? There’s definitely a big difference between being on the block and on the chopping block. Plus, you don’t seem to be able to get your head around the fact that, while they did buy a prominent domain, Business.com has actually built a very profitable search and directory business, in a large marketplace (B2B) where they are the clear leaders. Nice try on making it into a negative story though.

  32. Shuki Haiminis

    July 26th, 2007 at 9:10 am

    #15 & #16

    One thing people keep missing is that RH Donnelley purchased a profitable BUSINESS and not just a domain. The domain is in this case is secondary.

    If the http://www.business.com directory was for example (www.businessdirectory.com) and was throwing off an EBITDA of around $15 million/year they probably still would have purchased it. Granted maybe they paid a premium because of the domain which I think does and did happen with companies that have great generic domains. The type in traffic is great on plays like this. That is why I keep buying them :)

  33. BeingParents

    July 26th, 2007 at 9:28 am

    Imagine how much more it would be worth if it had content other than just ads.

  34. Thomas

    July 26th, 2007 at 9:53 am

    There has not been much hype around directories lately particularly after the meltdown of the Paid Y! directory and DMOZ’s own problems and inefficiencies.
    Thats a lot of money.

  35. Jim

    July 26th, 2007 at 9:57 am

    Hey BeingParents, imagine how much Google would be worth if it had content other than ads…

  36. vanguy

    July 26th, 2007 at 10:25 am

    local.com must be chopping at the bits. This is a gutsy move by RH because this is by far the largest investment by a yellowpages company to date. The other big purchase was yellowpages.com a few years back for around $100M. Time will tell if this is a good investment.

  37. Shuki Haiminis

    July 26th, 2007 at 11:18 am

    #35

    I agree ;)

  38. Ian

    July 26th, 2007 at 11:26 am

    23x? That is insane. You can’t predict what changes will happen on the web in 5 years. A change in the game in regards to traffic flow, search engines, ad compensation, etc could wipe this “investment” out.

  39. Daniel Rueda

    July 26th, 2007 at 12:46 pm

    The Premium Vertical Land grab of the 21st century is over. Time to let these vacant lots turn into skyscrapers of strategic vertical location. the speed of social change and search as we know it will be unfathomable.
    certain things stick out on this planet and the generic term business.com is one of the greatest. You can compare it to the sun. A huge mass that needs no explanation and is seen and felt in the hearts and minds of the world on a daily basis. what is the value of the sun if you could put your ad sign on it. Your absolutely right…………….. Priceless.

    DomainerLocator.com

  40. Ian

    July 26th, 2007 at 1:04 pm

    Daniel, you must be on some premium crack rock.

  41. Nick Gonzalez

    July 26th, 2007 at 1:19 pm

    Thanks Scott and Search Engines Web

  42. jose

    July 26th, 2007 at 1:22 pm

    Very poor information. What do we know about the bidder and future plans for this site?

  43. David Mackey

    July 26th, 2007 at 1:34 pm

    I’m a big fan of human powered directories/search. Maybe they will take the site in that direction for businesses?

  44. Jim

    July 26th, 2007 at 5:02 pm

    Nick,

    Thanks for realizing your errors and fixing the article. Reads better now…

  45. David

    July 26th, 2007 at 5:17 pm

    It looks like a Sedo domain placeholder page to me.

    Whatever happened to “content is king”?

  46. Marc Ostrofsky

    July 27th, 2007 at 11:17 am

    re: Business.com

    I sit back and watch the many posts about Business.com, the domain name sale and the price being paid for this deal.

    What so many don’t realize is the name sale I made years ago helped create millions of dollars worth of free PR…in a world where there are four parts to every newspaper (Business, News, Sports and Weather), Jake and Sky were smart to realize the instant brandability of this name. The free PR just helped fuel the deal.

    Jake Winebaum is a genius….he turned this firm into a powerhouse search engine that has a great, long term viable business that is a cash cow. Any buyer not only paying for the name….they are buying a business with people, technology, back end systems and a great market position. It’s a fantastic package…name, firm, business model, PPC income, growing market, etc. etc.

    What is so odd is that so many other players do not realize the great market positiion of this firm nor the marketing benefits of a fantastic domain name like Business.com. While I sold Business.com to them for a great win/win deal, I have invested in others such as MutualFunds.com, HeartDisease.com, Bachelor.com and Photographer.com, and to this date, no major players in the business world have even tried to purchase MutualFunds.com for a fair price, yet these same Mutual Funds (or their ad agencies) continue to spend tens of millions on PPC advertising…and don’t even try to acquire the URL for their industry?

    When will they learn?

  47. RTH

    July 28th, 2007 at 12:14 pm

    Congrats to everyone at BDC. WOW, I guess that gives new meaning to the phrase “WE CAME, WE SAW and WE CONQUERED.” CHEERS!!!!

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