NEW YORK, NY – According to Industry news site DNW.com, and a press release, the Iconic US State Name, California.com has been acquired, along with a group of related domain names, in the mid seven figure range. Not bad for a parked domain name.
What is truly amazing about this sale, and near-every business broker will spin their head around about, is that the sale is for an asset by itself, a possible business at a great address, with NO BUILT IN REVENUE OR INFRASTRUCTURE– IT MAKES ZERO — yet is packed with lots of potential; something us domainers see less and less sales based on these days.
Your average business broker loves to offer his or her ‘educated advice’ and ensure you, their trusted client, that the calculation and valuation of your business is very straight forward and simple; it’s worth a multiple of what it earns its owners in profit, times 12, 24, or maybe 36 months.
It’s just not the case when it comes to internet businesses, web sites and domain names.
The industry has changed significantly the last few years, and I’d bet that for most domain professionals reading this, near every way you’ve earned revenue with your domain names over the past several years, has changed or completely metamorphosed in some way. You’ve likely found all new ways to monetize your domains, or have just settled for declining revenues. And as far as sales, many names, and especially web sites, are selling far less based on what they could-might-possibly be one day, and more on what they are currently EARNING. Not necessarily their future earning potential, but what they are making at the time of sale.
However, the California.com transaction serves as a good reminder, that Internet domain names, and especially exact match geographic names, can be worth a great deal of money and can be turned into literal cash-registers if developed and monetized properly.
I’m betting on California.com being built out very well and serving its near 40 million Californian residents [plus millions of yearly travellers], very well as the company also owns MerchantCircle.com and other complex database driven websites.
According to the press release, the company which purchased it, One Planet Ops, plans to have as many as 40 employees working specifically on California.com and from my own experience running a GEO Domain in a highly populated region, I’d assume near 85% of them will need to be sales people selling ads.
As far as the exact price of this sale, I’ve heard, but cannot confirm, that the exact figure for this transaction will be released in the coming months and will make it onto the charts and tools we have become accustomed to tracking sales with. But even if it isn’t, “Mid-Seven Figure” likely places it well above $2M and likely over $3M, which is a tremendous amount of cash. There are also several other US State and Big City names for sale with industry brokers; so while prices have been somewhat declining for place-names, this sale will likely boost GEO domain morale a bit.
Now go ahead, send this to every business broker who told you your web name or online business was worth a straight and predictable 12, 24, or 36; because if that were truly the case, California.com would have sold for 12, 24, or 36 X $0 – Numbskulls.
About The Author: John Colascione is Chief Executive Officer of Internet Marketing Services Inc. He specializes in Website Monetization, is a Google AdWords Certified Professional, authored a ‘how to’ book called ”Mastering Your Website‘, and is a key player in several Internet related businesses through his search engine strategy brand Searchen Networks®
“Now go ahead, send this to every business broker who told you your web name or online business was worth a straight and predictable 12, 24, or 36; because if that were truly the case, California.com would have sold for 12, 24, or 36 X $0 – Numbskulls.”
That probably won’t be convincing unless the name is comparable to California.com.
Rob Toth says
We’ve sold asset deals with zero revenue for 6 or 7 figures. And many others for what would be called “outrageous” multiples — by those who are uninformed.
Any individual (broker or other) whose holistic calculation of an asset value is arrived at by using a financial multiples formula is either doing it as a negotiation tactic (anchoring the price to something lower so they can either buy it at a discount or sell it for you with easy work, if they are a newcomer “broker”) … or they are simply uneducated on the topic.
Anyone can offer health and fitness advice – it doesn’t make them qualified to.
The real price of any asset is and always will be a combination of:
1) How much the seller is willing to let it go for.
2) How much a RIGHT buyer is willing to pay for it.
If those 2 align – you have yourself a deal.
And a RIGHT buyer will factor everything including soft elements: branding, potential, let alone technology, team, IP, content, audience, partnerships etc – well beyond just financials.
Financial multiples based valuations are the home of elementary level sales reps (“brokers”) and have nothing to do with real valuations.
Among our deals – we’re currently working with Austin.com . And the conversations we’re having with prospective buyers (including prices that have been respectfully declined by us) have very little to do with the current business model and it’s revenues as.
A valuable piece of downtown real estate is still a valuable piece of downtown real estate regardless of whether it currently holds a commercial skyscraper, a local breakfast diner or a community organic garden … and an intelligent buyer very certainly knows this.
We hold 100% close rate across our 34 completed deals – the bulk of which sold for financial earnings multiples that don’t make any sense.
Nice acquisition and best of success with the Cali domain to Payam Zamani and team.
– Rob Toth