We covered this story as it went up for sale earlier this year. The Wall Street Journal is reporting that the sale just happened. The final purchaser is R.H. Donnelley who bought Business.com to increase their influence of the Internet in the yellow-pages and white-pages business, which publishes paper and online directories in 28 states under the AT&T, Dex and Embarq names, among others.The Dow Jones and the New York Times were both bidding on the company. The sale was expected to close between $300 to $400 million. So the price was right on target. Business.com currently brings in about $15 Million dollars a year in revenue. So the sale was 24 times earnings. This is a rather high price for a company but generally bigger companies sell for a higher multiple. 24X is very healthy. If a company is able to demonstrate $1 Million dollars in revenue that would make it worth about $24 Million according to these numbers. However, smaller companies sell for a smaller multiple. Generally between 8X to 15X. Now you can see why 24X looks so good for this company. One could argue it was the domain name that made it so valuable.
The parent company has revenues of $442 million and has a market capitalization of $9.67 Billion. R.H. Donnelley’s stock currently trades at nearly 22X their current revenue. This purchase is right in line with the value of their stock so it is a good purchase from my perspective.
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