At the time of the purchase, business.com reportedly had an EBITDA of around $15 million/year. For online, growing business valuation is certain multiple of the EBITDA, typically that number is between 15 and 25. In this case, if you take the multiple to be 20, then the value of the domain name is $50M not $350M.
The above analysis has various nuances too; some may argue that the multiple actually includes the value of the domain name. But to say that the domain name business.com is worth $350M is incorrect.
I have bought and sold domain names for clients sans the underlying businesses. The valuation of pure domain name is not an easy task. If the business.com came up as a domain name for sale without the related business, I doubt that it will fetch $50M; $10-$20M, may be; but not $350M or even $50M.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment