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Ben Barren - Confessions of a Mad Man » M+A Multiples for Calcanis Apple Juice

M+A Multiples for Calcanis Apple Juice

Originally uploaded by Margie1.

Organic Fruit Juice is all the go Downunder and like all good investors Mr Calcanis is a contrarian; Similarly smart entrepreneurs (even those who have sold their companies and are now employees) like to talk down their business segment, because it doesnt draw attention or raise prices. (which could drive up amount bloggers want to be paid and terms of assigning copyright etc) However, and whatever, I remember a couple years ago (lets call Web 1.5 days) P/E’s for acquisition of Internet businesses averaged at around 40 times earnings. That should have only gone up : We’ll see when Google close an earlier stage Riya @ $40-$50M vs later stage Yahoo’s Flickr @ $30-$40m

Internetstock blog have analysed CNET as a point of comparison : P/E: We apply a 42X multiple to our 2006 proforma EPS : Also remember Google @ 52 P/E - i would think P/E of 35-50 depending on growth for private Blog’ Co’ eg AlwaysOn current capital raising would be a guide although its not an acquisition).. To me, Calcanis’ P/E numbers (5-30) seem low : Of course, any 2.0 deal @ under the $50m purchase price, there is a large premium for either brand, engineers, audience or technology, which in the case of blog properties like boingboing, would be skewed to brand + audience assets (plus an execution/segment leadership premium as per Calcanis did/got) Not that Im saying there is a Skype like valuation for Boing, because with blogs there isnt the trillion dollar telco market to displace. Its like buying a high growth niche magazine, with some GEMAYA - AOL catch-up phat thrown in. (i remember when hotmail was bought for $400M and had 10m users : $40 per user, personally i think $25-$50 is the resting price for a somewhat qualified user as one part of the triangulation process - mckinsey types look at the value of cable tv subscribers and other media types as benchmarked peers + NPV DCF’s blaagh etc) I agree that eyeballs by themselves are pretty useless as are revenue, and even profit as singular measures - if that was the case, buy yourself a fashionable magazine or domain hijacking business. (“Domainers have their heroes, and one of the most mysterious is a man named Yun Ye, a Chinese citizen living in Vancouver, British Columbia. He is credited with boosting the entire market when he sold his portfolio of more than 100,000 domains to Marchex. His names were bringing in more than $20 million a year in revenues — and $19 million in profits — when Marchex paid the equivalent of 8.6 times annual earnings, based on figures provided in SEC documents.”)

Mr Calcanis : Boingboing, like any other web property, is worth 1-10x revenue and 5-30x earnings. So, if BB does 30-50k a month/360-600k a year (which seems possible to me based on the ~5m page views a month) it would be worth between 500k and $3M (based on revenue since with five mouths and server hosting to pay for it doesn’t really have earnings–yet!). Those numbers fall into line with my calculation of a really loyal user being worth $1-3.”

I like MrManus analysis, how do you like them apples ?

Will: Do you like apples?
Clark: Yeah.
Will: Well, I got her number. How do you like them apples?

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