M&A heats up, 2 more buy outs today.

Meetic bought Datingdirect.com today for 27.3 million pounds (40.67 million euros/$52.8 million).  

http://in.today.reuters.com/news/newsArticle.aspx?type=technologyNews&storyID=2007-01-08T230417Z_01_NOOTR_RTRJONC_0_India-282717-1.xml&archived=False

Looks like they got a good exit,  Datingdirect isn’t as big of a player as they make out.  Lots and lots of advertising  but session time is only 3 minutes compared to 20 minutes average for the rest of the top players.  Match.com is certinally far bigger, and datingdirect is definately not 3 times the size of match.com as meetics news release hints.

Hearst picked up ecrush today.    Any independent companies going to be left to attend the dating conference on monday ?       The ceo of ecrush is on the final panel with me next week.

http://www.paidcontent.org/entry/hearst-buys-youth-social-networking-company-ecrush

27 Responses to “M&A heats up, 2 more buy outs today.”

  1. Sam Moorcroft, ChristianCafe.com Says:

    Marcus, if what you are saying is true (“Datingdirect isn’t as big of a player as they make out”) that would explain the tiny multiple of revenue they got (2.5x, based on £11 million annual revenue)

    As soon as I read this, I knew there had to be something to explain this. Dating sites typically receive somwhere around 4-8x rev.

  2. Zoltan Says:

    Markus, what are your plans? Do you want to sell or prefer to remain in charge?
    I assume you also received tempting offers.

  3. how Says:

    How do you guys keep up with all these conferences?

  4. Sam Moorcroft, ChristianCafe.com Says:

    When you work only 2 hours a day as Marcus claims, you have all sorts of time, that’s how;)

  5. Mike Smith Says:

    Marcus, I don’t quite follow your logic with how to value a dating site? What’s so important about time spent online, unless you are selling advertising space which DatingDirect.com doesnt? Surely the amount of members and the revenue earned are the 2 main important points?

    Plus Comscore and Neilsen both have DatingDirect.com as having far more visitors in the UK than Match.com… this is independent third party research..

    Also comscore November figures (latest available) have DatingDirect.com Total minutes per visitor 41mm compared to 34mm for all Match.com sites combined. (Match, udate and Chemistry.com in UK) and 1,652,000 UV’s for DatingDirect.com and just 516,000 UV’s for ALL Match sites combined.

    Regards,

    Mike

  6. Markus Says:

    Mike I was looking at hitwise data where they show 3 minute session time for datingdirect.

    I find that if you have super low session time the vast majority of traffic is spam or useless visitors. It shows that the marketing budget is massive and the site really has no traction in the market. Should some other company come along and mass spend a company like datingdirect would die off as their traffic is starved.

    Take a look at true.com, Massive traffic, little traction, little user engagement they probably make a profit but should they lose myspace they would be back to losing millions a month.

    My point is merely that dating sites with low user engagement create the illusion they are profitable. As soon as the advertising rates rise or competition increases they quickly go bankrupt. High user engagement = viral growth which means cheap advertising.

  7. Mike Smith Says:

    Hmmmm… “Should some other company come along and mass spend a company like datingdirect would die off as their traffic is starved.” Match.com has spent a small fortune in the UK in the last 18 months.. an estimated £10m ($20m) on TV ads alone.. and still has a third of the UV’s as DatingDirect.com… whereas DD hasnt spent anywhere near that amount of money… and DD obviously made a profit from the £11m turnover for Meetic to buy them for £27m..

    You’re obviously very clued to have achieved miracles with POF which most people respect… but please check ALL the facts before making comment on these points…

    Regards,

    Mike S

  8. Mike Smith Says:

    ohh, and DatingDirect.com doesnt have online chat or messenger like the other sites you mention so that would explain why Hitwise may show lower levels of activity (but that doesnt explain why Comscore shows more time spent online with DD than Match which is my point).

    I think anyone can argue any point by choosing and cherry picking any stats that suits their needs… don’t you Markus? ;-)

    M

  9. Markus Says:

    Here is another free ranking system…

    http://ranking.websearch.com/SiteInfo.aspx?url=datingdirect.com

    average 1 pageview per user, vs 20 some for match.com

    The thing I notice that is really off is that datingdirect has 13 subdomains which act as some kind of load balancing for the webservers. That could mess up the session time I suppose and throw off some ranking systems.

    my point is low session time = low user engagement. Also as others have mentioned 2x revenues is far below the normal sale price of dating sites.

  10. Sam Moorcroft, ChristianCafe.com Says:

    Yeah, you hit the nail on the head with that last sentence, Marcus:

    “Also as others have mentioned 2x revenues is far below the normal sale price of dating sites.”

    (That was me:-)

  11. Mike Smith Says:

    I take all your points on board, and don’t forget if you are comparing US stats this is a UK business with only UK members..

    £27.3m for £11m is nearer 3x.. what other dating sites have sold recently for more than that then?

  12. Sam Moorcroft, ChristianCafe.com Says:

    Actually, it is 2.48x to be precise. Check sales going back the last few years – there are tons of examples.

  13. Mike Smith Says:

    Last few years? Show me just 2 then in the last 6 months that have sold for more than 2.5x turnover?

  14. Sam Moorcroft, ChristianCafe.com Says:

    Nothing in the last 6 months. However, before that:

    1. Spark bought MingleMatch in May 2005 for $13.1MUS on revenue of $2.5MUS. That’s 5.24x

    2. FairFax bought RSVP.com.au in July 2005 for $38.92M Aus on around $6M Aus revenue. That’s 6.49x

  15. ski Says:

    Markus

    Have you noticed facethejury.com’s rebranding that is mocking your anti-marketing approach?

    Everything is layout very similar to plentyoffish.com

  16. Mike Smith Says:

    Sam, exactly, nothing in the last 6 months.. in fact the 2 you mention are about 20 months ago… anyway, from what you are saying looks like Meetic got themselves a bargain.. their share price has leapt over 40m euro already…

  17. Sam Moorcroft, ChristianCafe.com Says:

    But, “Mike Smith” (as anonymous as you are; why not identify yourself?) why does the last 6 months matter (at all)? If anything, based on market activity generally, esp. with valuations paid for sites like YouTube.com, it could be an indication that valuations in general are going up. Consequently (if valid), you would expect an even higher valuation for sites in the social networking or dating space.

    And, don’t forget, dating sites that are sold are generally profitable, or, at the very least, have healthy cash flow. That puts an even higher premium on them.

    Of course, ultimately, it is up to what the buyer and seller agree it is worth. Judging from market conditions lately, though, that value is way up.

  18. Markus Says:

    http://www.paidcontent.org/entry/daily-mail-group-buys-dating-and-a-classified-site-for-864-million

    Its a lower multipul then what Allegran got in the UK in last years sale. I am assuming the sale prices are lower because these companies aren’t all that profitable.

  19. Bill Broadbent Says:

    Markus,

    I don’t think True would feel MySpace the way you think they would. In fact, I think they have discovered a pretty strong arbitrage model on their CPA deals which I’m confident is a huge part of their revenues. Their vulnerability seems much more likely on their credit card merchant side. Go through their current registration and you might be very surprised. (Be sure to read terms and conditions though)

  20. Jon Frate Says:

    why does the last 6 months matter (at all)? >/b>

    what Mike Smith is saying is that if you want to take “comparable transactions” you have to consider the timing of the said comparable transactions.

    The market 1 year ago was MUCH different than it is now.

    Product cycles have evolved, customer acquisition is more expensive, paid industry growth has slowed.

    You can’t look at multiples in vaccuum. You have to consider:

    – Revenue multiple (projected)
    – Revenue multiple (trailing 12 months)
    – Ebitda multiple (trailling 12 months)
    – Ebitda multiple (projected)
    – strategic values

    AND you have to consider the above based on comparable transactions *in a similar time frame*.

    Consider – I started an auction site. It has 10,000 members.
    ebay is an auction site that IPO’d in 1998 at a multiple of $800 per member (just making numbers up).

    Does that mean that today in 2006 i deserve the same multiples as ebay?

    No, no it does not.

    So don’t compare this trasaction with the recent transactions to suggest that it’s undervalued or that meetic got a ‘deal’.

  21. saidamin Says:

    Hi Sam and everyone else I have not met yet =)

    Not so sure that valuations for dating sites are going up; right or wrong recent acquisitions in the dating space seem to point otherwise. Heck, Zencon (BlackPeopleMeet.com, etc), Date.com and others have been unsuccessfully shopping themselves for some time.

    Social networks are indeed hot and coveted. Much of their appeal is in the perceived sexiness of their scalability to potentially make a whole lot of revenue (tbd). Dating sites acquired are usually profitable but how scalable are they? (especially niche sites).

    Whatever the case, I certainly would not sell for less than 4 or 5 times gross revenue if still experiencing solid growth with a dating business. Beggars can’t be choosers so if you are not a beggar and doing well, hold out for a Great (or better) offer. Like the housing market it will fluctuate =) Timing is everything.

    Life is good.

    Peace.

    -S

  22. Sam Moorcroft, ChristianCafe.com Says:

    When you aren’t hungry, no offer is high enough;-)

  23. saidamin Says:

    *hehe* indeed.

    Life is good.

    -S

  24. dayllan1024 Says:

    I got 1 question.. how does this sites, including yours get so much members.. i mean.. if i see a dating site with a lower number of people i leave.. so.. how did they do to have so many members?

  25. john smith Says:

    @dayllan1024: Listed on the frontpage of Google for dating keywords.

  26. LED Grow Light Says:

    online chats are nice, you can meet lots of friends and acquintances out there over the internet -,;

  27. Deejay Says:

    OeWIlm Walking in the presence of giants here. Cool thinking all around!

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