Business.com has closed another chapter in its long journey from a $7.5 million million domain name bought on a hope and a prayer, selling to RH Donnelley for $350 million (WSJ reporting up to $360 million). RH Donnelley beat out Dow Jones and the New York Times during the bidding. The site had been on the block since late June and drew a lot of attention for outlandish valuations that turned out to be closer to the truth.
The buyer, RH Donnelley, is a directory and online local commercial search company. They are responsible for several white and yellow pages directories across the country. Business.com has turned into a business search directory, so the synergy between the two directory sites seems straightforward. The site also received a huge bump in traffic starting back in February according to ComScore.
The property reportedly had an EBITDA of around $15 million/year. While previous speculation framed the sale multiple of 25 times EBITDA ($400 million), it finally sold for around 23 times. The sale is about 47 times the $7.5 million 1999 purchase price. However, since the sale was in stock, the cash value reportedly shrunk to $2 million upon its later redemption.
ECompanies’ decision to set a new domain name price record was not a rash one, Mr. Winebaum said. Business.com is one of the best brand names available, and will require much less marketing spending than other domain names, he said.
“Given what companies have been spending to build brands on the Internet, this price was a sound investment,” said Mr. Winebaum. He noted that some Internet companies are spending tens of millions of dollars on advertising to build brand recognition.