Business.com - Sold for $350 million

[Theo]

Yes, but in real numbers it's not what goes into their pockets
Regardless, the deal is indeed a sale of a company and its assets - NOT that of a domain name as when they acquired business.com for $7.5 million.

 

[Onward]

This isnt a sale of a domain name, its a sale of a very profitable business. Its just like if Facebook.com were to sell and just like when last.fm sold for over 200 million. People are getting confused and thinking this is a great domain name sale because just the domain name alone had sold previously several years ago.

There is no confusion here...This sale happened not because of a generic business directory anyone can put togather with proper funding...but because of the name Business.com.

Although the income makes this a true "business" sale though...

 

[EM @MAJ.com]

Yes, but in real numbers it's not what goes into their pockets
Regardless, the deal is indeed a sale of a company and its assets - NOT that of a domain name as when they acquired business.com for $7.5 million.

Yes, I agree this is a business sales e.g. company + assets. It is a fair value if they make $50M yearly revenue.

Well done.

 

[revolution1]

wow that is the second huge internet biz sale in as many weeks. I think that it is very risky, even approaching bubble risky but who am i to say what the future will hold for domains.

 

[H2FC]

If you wanna know what the domain market will do just watch the stock market....they run in tandem.

 

[petrosc]

by the way, where is it stated that they make $50M/year? I dont see anything like that in the article.

 

[Simsi]

Business.com isn't just a domain though, right? An article says that they employ over 100 people and generated revenues of greater than $50 million this year.

Exactly. It was a "business" they sold, not just a domain name.

 

[revolution1]

by the way, where is it stated that they make $50M/year? I dont see anything like that in the article.

It says that the revenue is $50 million a year. Revenue-Expenses=Profit. So they have 100 people working for them lets say at an average of 35k, servers, office space, supplies etc... I do not know how lean an operation they run but i bet they make better margins then some of the traditional Bricks and mortar companies do. Still at 350 million the purchasers paid 9 times revenue which is high, but this is a high growth industry with much advertising money to be made and possibly an exponential growth in online ads in the next 10 to 15 years.

 

[Rubber DuckRubber Duck is verified member.]

they overpaid a ton on this one, but good sale nonetheless.

That was said often enough when they paid $7.5M.

Exactly. It was a "business" they sold, not just a domain name.

Maybe true, but much of the value is in the domain. The price paid in relation to revenue of the business doesn't make sense unless you take the domain into account. Take the domain out of the equation altogether and the existing business probably isn't even viable.

You are right, however, the DNJ model of reporting domain sells is under pressure , because in many instances that is just not how they are going to be sold at the high end. Domains are going to be integral parts of business deals and takeovers, they are going to have to start appearing on balance sheets as tangible assets, and yes somebody is going to have to give a lot more thought into to how they are valued. Expect the IRS to have some input on that one.

 

[PRED]

That was said often enough when they paid $7.5M.



Maybe true, but much of the value is in the domain. The price paid in relation to revenue of the business doesn't make sense unless you take the domain into account. Take the domain out of the equation altogether and the existing business probably isn't even viable.

You are right, however, the DNJ model of reporting domain sells is under pressure , because in many instances that is just not how they are going to be sold at the high end. Domains are going to be integral parts of business deals and takeovers, they are going to have to start appearing on balance sheets as tangible assets, and yes somebody is going to have to give a lot more thought into to how they are valued. Expect the IRS to have some input on that one.

AGREED

 

[irongloves]

Anyway I dont think they sell only the Business.com business. I think they sell all their network (that includes also Work.com)

Who said they make $50,000,000 per year??? Where you read? In a crystal ball?

http://www.hoovers.com/business.com/--ID__103149--/free-co-factsheet.xhtml

Check above and they state a rough figure of sales of $4.8M per year

 

[DomainingCom]

Let say they pay 35 millions for the name itself - which is a terrific amount.
It's still less than 10% of the total price.
And trust me probably +20 years of type-in traffic revenue.
So for sure the name was appealing but the price was for the business not the name.
As an example:
We have been advertising for years in Business.com (few thousands dollars monthly ) for keywords without absolutely no relationship with "business" so the traffic we paid and got was not from the search type-in they may get but thanks to their advertising efforts.

 

[Deleted member 78222]

This is certainly an incentive to develop good generics. With so much news lately about development I hope we see some more of these awesome business sales in the future.

 

[Rubber DuckRubber Duck is verified member.]

I personally think Ebay paid more for Rent.com but that was a similar scenario.

Any according to Owen Frager:

"The company was pursued by companies including Dow Jones & Co., publisher of The Wall Street Journal, and New York Times Co., which lost out in the auction conducted by Credit Suisse Group."

If it went to Auction, the assumption has to be that the price was right!

 

[Onward]

As an example:
We have been advertising for years in Business.com (few thousands dollars monthly ) for keywords without absolutely no relationship with "business" so the traffic we paid and got was not from the search type-in they may get but thanks to their advertising efforts.

I do not completely agree....although I do agree that they have been successfull with their ppc, that they can charge companies thousand of dollars a month to be listed in their search engine.... and that they are more than just a domain name (with 7-8 years of operation)....but I think you are grossly underestimating the true worth of a domain name (a "PREMIUM" generic domain name).....what really matters is the name beneath it....what they have created on business .com was a tired old business model in 1999...nothing innovative, creative or unique...a pay for placement directory....then adsense came along...

This model actually outlines and proves the true value of a generic domain...put a tired old business model on a great domain, manage it well and it will be an enormous money maker. Doing a generic directoy/search engine was not rocket science back in 1999. What sets it appart? The name. I agree that there is value in 7-8 years of operation as a search engine, but the name is what has made this search engine.

The same thing was done for creditcards.com....the owners copied countless business models already thought of and tested...put up the same thing and...guess what the power of the generic name is what made the business.

Why not use YellowPages.com ? Hire the development & management team to create and run the serch engine...a lot less that $360 million...you think? 7-8 years...what do you have? Not business.com ...the buyers must agree.


And...making a comparison to facebook.com is silly IMO...apples to oranges.

This is my simply my opinion.

 

[carlton]

... What sets it appart? The name. I agree that there is value in 7-8 years of operation as a search engine, but the name is what has made this search engine.

The same thing was done for creditcards.com....the owners copied countless business models already thought of and tested...put up the same thing and...guess what the power of the generic name is what made the business.

Very well put onward,

 

[DomainingCom]

Ah these domain lovers - they think that the name makes it all.
Again, the name by itself should not represent more than 10% of the sale.
Which by the way it's fantastic (and probably overpaid).

CreditCards.com is different, there is a total matching between the name and the content.
At the inverse, business.com may have been called with another name (not generic), this should have not change a lot the sale price.

Again, the type in traffic represents peanouts compared to the organic traffic and paid traffic the site got.

...

 

[carlton]

Ah these domain lovers - they think that the name makes it all.

:smilewinkgrin: Actually, the name is a very important component in the business concept. I agree, a well-designed and marketed search directory can succeed with any variety of names. But, "Business.com" injects much greater synergy and momentum into any good business model. Similar result with any of the successful generics: hotels.com, apartments.com, homes.com, loans.com.

Not just about the domain name, true. But, don't minimize the impact of a quality generic driving the business forward through descriptiveness/appeal = instant authenticity and public acceptance. Very, very large X-factor yielded in the success formula.

 

[DomainingCom]

At 35 millions just for the name alone, sorry, I really don't think I am minimizing the impact of the domain name in this transaction.

Now what will be the sale price of Ebay today if the owners have been called this service auctions.com ? Do you really think today it will change a lot the sale price?
Ok, I am also a domainer so I will say 10% more to share with you that the name is important, but important does not mean all!

...

 

[carlton]

... Now what will be the sale price of Ebay today if the owners have been called this service auctions.com ? Do you really think today it will change a lot the sale price?

I really can't answer that as ebay was so successfully branded around a useful service. The part which is impossible to define specifically is how much of Business.com's attraction and popularity is tied into the pure domain name itself. Advertisers are much more likely to buy in to a known term: "Business.com". Hotels.com, for example, has Orbitz, Travelocity, and Expedia (non generics) as competitors and the value of each as a business is very considerable. However, Hotels.com is the only one of the three with significant value attached to the domain name itself. Further complicating a valuation is how much of Hotel.com's overall business was enhanced by having a pure generic name widely recognized by the public. One would have to analyze Apartments.com, Homes.com, Realtor.com, Loans.com, Business.com, Cars.com, etc. among their direct competitors to just get a rough idea, imo.

The logic behind this idea is irrefutable as evidenced by 100% consensus on the valuing, and pursuit, of generic domains. One can deduce that the pure domain value of "Business.com" is far in excess of the 7.5 million price tag of 1999 ... but far less than the $340 million sale of Business.com as a whole.