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The following is a perpetual-work-in-progress. Once you start to compile a list of mergers and acquisitions, you realize why it’s nearly impossible to have a complete list. We are quite confident that the following is a very good, comprehensive list of the largest, more notable deals… but it is not - and no list will be - fully complete because there are too many countries around the world and too many industries to report (it is highly possible that the Wall Street Journal or Financial Post, for example, has such a list… but it would be thick and unwieldy).
We have included:
- many industries
- have not adjusted for inflation
- mergers (be it all cash, cash/stock, or all stock)
- acquisitions (we have excluded partial acquisitions)
- private equity deals.
It is certainly not complete, send me any ones you think I am missing or industries you want us to add next to ash@mojosupreme.com or leave in the comments.
Trivia:
- In 1981, when DuPont acquired Conoco for $7.8B, it was the biggest deal of all time. But adjusted for inflation, that remains a $20B deal by 2008 standards.
- KKR’s private equity deal for KKR remains the biggest buyout when adjusted for inflation, but in actual dollars it has been long surpassed.
Related on HipMojo.com:
Paid Content reports that RH Donnelly bid the highest for Business.com, going all the way up to $345M for the company that started off with a $7.5M purchase of a URL and a subsequent $10M funding round.
RHD, a publicly traded firm, did $1.895B in 2006 revenues, but only 2% of that (according to PaidContent) - or $38M - came from the Web. So, to remain relevant in the 21st century, it is spending over 10x that in order to reposition itself and strengthen its online presence. In a way, it makes sense, I can’t for the life of me imagine upcoming and existing generations turning to books and print in general for directories and what not…
Interestingly: it has $75M of cash according to Y! finance but $10B in debt, so it is really leveraging its books to shift things online. Of course, is Business.com the best $345M can buy? Probably not… but when you get a paltry $38M out of nearly $2B in revenues from online and your clients are moving online, what’s $345M?
Last week I wrote: Ask.com should stop spending $100M per year in ads and buy up new search companies, then once bloggers began to increasingly criticize its ad strategy (and thus put the company in the spotlight), I asked maybe I owed them an apology, after all, it encourages folks like yours truly and many others online to put forth what Ask.com should be stressing. I doubt the thinkers at Crispin Porter Bogusky actually planned it that way, but welcome to marketing: where you get paid regardless and someone will find a way to suggest you’re brilliant.
Anyway, today the New York Times talks about how more and more people are still launching search-based startups, and how backers like Sequoia - who invested in both Yahoo! and Google - are still open to suggestions.
Engines like Hakia, Accoona and Powerset are trying to grab market share by writing a more sophisticated algorithm. A growing number of entrepreneurs are placing their bets, however, on a hybrid system that puts humans back into the search equation. They are grouped under a newly coined rubric, “social search,” and it is becoming a crowded field.
Newcomers like Squidoo, Sproose and NosyJoe offer search results based on submissions or votes by users. Bessed also relies on users to suggest the best Web pages for a topic, but then has editors refine them. ChaCha gives customers the opportunity to have an online chat with a human being who can provide search assistance.
Sometimes a small variation on an existing idea is enough to make it stand out. In October 2006, when Bessed began its search service with the manually edited results pages, it had only two editors and covered just a few hundred search terms suggested randomly by users.
Last month, another company, Mahalo (Hawaiian for “thank you”), inaugurated a search service with manually edited results. It started with several advantages: venture capital backing, 30 editors, systematic focus on the most commonly requested search terms, and the added idea of supplying Google’s search results for any search not covered by its own best-of-the-best lists.
Mahalo will run into challenges, but much like YouTube, Sequoia’s already planned its exit wisely.
The article references (even though the online version does not link to!) Don Dodge’s post where he suggested that 1% market share translates to $1B. I wrote a follow up saying that that is actually not true for laggards, though search is lucrative enough to create winners out of losers.
Just this past week, Business.com - who has been on the auction block for a couple months but yet to find a buyer - whispered its financials to the market in the hope of finding a suitor, at a $300-400M price range. Photobucket did the same thing, via the same method, and ultimately sold on the low end of the desired $300-400M asking price, when News Corp. paid roughly $250M plus an earn-out of $50M for the Denver-based photosharing site.
I think Ask.com - after selling to InterActive Corp. for $1.85B in January 2005 - is now worth $3.15B. This NYT article only reiterates the notion that if Ask.com stopped advertising tomorrow and bought a bunch of search engines, it would be money better spent.
I don’t want to pretend that I’m the first or only person who’s suggested this, but trust me, not enough people are. Ask.com’s market share has fallen, and I’d be hard pressed to find many people who have turned to Ask.com as a result of their marketing.
Disclaimer: Our sister site, MetaMojo.com, runs two search products: a domain specific, contextual vertical search network and a video meta search engine. As well, I own shares in Yahoo!, Google’s main competitor.
I make that [first] disclaimer in the middle of the post, because I think that for the odd search query, any search engine can be better than Google. Our MetaMojo.com is very strong in health, travel, entertainment, etc. Take for example our result for Barcelona versus that of Google’s. But the problem is in the context of who can be relevant in search, the quality of the search result is secondary to the distribution the results will get. We boost search queries by growing the overall ad traffic on the Mojo Supreme network. Many of these search engines might die, not because their algorithm or results are weak and ineffective, but rather, because they will fail to get the search market’s equivalent of oxygen: traffic and distribution.
But once you have traffic, as does IAC, then you better ensure that your search is up to snuff.
Remember this week Terry Semel resigned from Yahoo!, one of this cardinal sins, say critics, was not buying Google for $1B early on. I doubt any one of the engines NYT mentions is the “next Google,” but I wonder how many of them $100M would buy.
This morning I woke up and got a bad feeling that we were back in crazy times. The WSJ ran a story about how Business.com was about to get the last laugh in a sale of the company for $300-400M. Insanity, I thought. After all, insanity means doing the same thing but expecting a different outcome. It’s a pillar of the current Administration, some would argue.
But what is different this time around, is that it’s not simply a URL that is being sold, there’s an actual business there.
After all, indeed when Business.com (the URL) was bought for $7.5M, the joke was that the site would not generate $7.5M in its lifetime to pay back for the purchase. Then again, the URL was bought at the tail-end of the first boom, which was subsequently followed by a period of anemic ad revenues and lukewarm digital prospects.
But because of that, search advertising took off, and with it did the value of generic URLs. We looked at this ecosystem way back, here. Business.com became a beneficiary both of direct navigation traffic and revenue but also built up its directory and pay-per-click business. It even raised $10M in financing. One would have thought: more madness!
But, to give credit where credit is due: the company today reports EBITDA of $15M, which would imply a 20 times P/E multiple if it got $300M and is looking for $300-400M in a sale. WSJ is running the story and seeing how DJ - parent of WSJ - is in the running, the entire thing is surreal, but then again, reading WSJ while Rupert-Gate is ongoing is even more surreal.
Mind you, at 20 times P/E, the deal would be “cheap” for Yahoo! and Google who trade at P/Es that are greater than that. It could also be interesting for MSFT who is desperate to gain traction in paid search. This could help them in a lucrative niche vertical that is not going to get smaller in 1, 2, 5, years. And, to boot, the same WSJ article states that Business.com’s traffic grew 50% in the first two quarters of 2007 year-over-year compared to 2006.
Now this could mean three things:
1 - The investors and founders have been at it for 5-7 years or so and want an exit, which is to be expected…
2 - But it could also be a hedge against the inflation in CPC prices in search advertising. We’re seeing a lot of advertising shy away from search advertising… and I personally think that at this rate, when it’s said and done, Google will own this market, if it does not already. Bottom line: sell high. I am not sure this is really the case, since paid search will continue to grow and remain the largest slice of the online ad pie, though it will grow slower than video and display ads.
3 - Old media is really looking for online growth and they will pay a premium whereas new media ones already in the space probably won’t. As a result, the company leaks this to WSJ.com, that gets WSJ and NYT excited which in turn make YHOO, MSFT and GOOG kick the tires to protect “their market” - i.e. search. Rupert Murdoch finds out there’s an auction going on and sends his men out to scope out the deal, too.
I just hope that bloggers, the mainstream media etc. do emphasize that there is a business here that’s for sale and not only a URL, otherwise we’re never going to hear the end of it.
Hands up, however, if you’ve never been to Business.com. Yeah, thought so. You can put your hands down. You too Mr. Murdoch.
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