Internet Brands, Demand Media, and Website Valuation

January 7th, 2011 by Chris

Call this an addendum to my previous post on website valuation.

I’ve never been a fan of people offering 2x profits for an established profitable website, but I explain how and why in that previous post.

Internet Brands, a large online publisher that also happens to own vBulletin, was a publicly traded company until recently, when it was taken private by a private equity firm. The price for this manuever was just over $13 a share and it ended up being… wait for it…. 6x revenue (gross) or 25x EBITDA (profit).

This happens to be roughly the exact same multiple AOL paid for Web Logs Inc, though that was a much smaller transactions ($25m, vs this $650m).

We should know more about valuing content websites soon when Demand Media, that great content factory, goes public. What P/E ratio will they have? I’m betting somewhere north of 25x

Here is a good comparison of Demand Media and Internet Brands for further reading.

Oddly enough… one of those two companies may have offered to buy one of my sites previously and what they may have offered me was less than the 25x others have paid them. If the offer took place, which I cannot confirm, it obviously did not conclude as I’ve sold no sites, but it looks like that sort theoretical aquisition would have been profitable for them, since I wouldn’t ask for 25x (for the record, I’d sell pretty much any site for 20x earnings).

Posted in: General » by: Chris