Yesterday D&B announced that it had purchased Allbusiness.com for $55 million. While the business as is may in fact be worth $55 million the acquisitor usually pays based on what they believe the future value of the acquired business will be. Part of that future value is based on what the acquirer thinks it can do with the business (e.g. cut costs, increase sales, etc.). But in this day and age if you are buying a web property and not considering how search engine optimization can add to or subtract from the value of the asset then you are likely missing a significant part of the equation.
A couple of cases in point:
Topix.net purchased Topix.com for $1 million and ran the risk of losing a large amount of search traffic when it switched all of its content over to Topix.com. See this WSJ article for more detail.
When CitySearch purchased InsiderPages the resulting links generated by the media covering the acquisition combined with the links from across numerous IAC properties to IP resulted in a 2x to 3x increase in search engine referrals (according to several different sources). This alone probably paid for the acquisition.
So if you are going to drop a few mil for a web business and don’t understand SEO you may be dramatically over paying or maybe (hopefully) dramatically under paying. All you M&A hotshots out there if you are about to pull the trigger on your big deal you may want to drop me a line…
One Response Comment
Excellent – you’ve just answered a burning question of mine!
I’ve always wondered what the effect of all these ‘XX purchased’ links had on SE traffic.
2-3x is quite a massive gain.