Everyone was predicting that we'd see some acquisitions this year due to the economy. But the economy has had the opposite effect. Companies are hoarding cash and probably waiting for the weakest to die off before moving in.

But I wanted to propose an experiment for you all to take part in. Lets create a fictional job board and find out how you put a value on it.

First I have 2 key questions for you to answer.

1. Should a job board be valued based on a multiple of sales or a multiple of profits? If so, what number multiplier would you give each?

2. Would you sell a job board at this moment in time given the down market?


Now lets create our fictional job board. We'll call it "Xjobs". Its a national niche board for XYZ industry (has decent growth predictions for future). Its the leader in its market.

FIGURES FOR PAST 3 YEARS


Sales: $400k in 2007, $325 in 2008, $250k (projected 2009)

(sales slowing to due to job market conditions)

Expenses
: average $25% per year

Profit margin: 75%

Total Profits for last 3 years: $731,250

Monthly page views: almost 1 million

Uniques: 150k a month

Ok now answer the first 2 questions (via comments) and give your opinion on the value you would pay for a site like this. Explain your reasoning. If you need more information let me know and I will add/edit the original post.

Views: 427

Tags: job board values, valuation

Comment by Chuck Sheriff on March 16, 2009 at 9:04am
Mult. of Profits and no...I would not sell now. I would make every effort to build up the resume database for a later sale.
Comment by Jeff Dickey-Chasins on March 16, 2009 at 9:05am
how strong is it in its niche? A leader, an also-ran? How much competition in its niche?
Comment by Chris Russell on March 16, 2009 at 9:07am
its the leader in its market
Comment by Jeff Dickey-Chasins on March 16, 2009 at 9:13am
As a buyer, I'd want it now - it probably won't get cheaper. The profit margin is high enough to make me think the current owners are starving it by taking profit and not plowing it back into the property - which is also shown by the declining sales over 2 yrs. Price? Maybe the 1 yr sls (250K) or a bit more. Depends on what is going on under the hood. If the decline in sales is purely the overall mkt condition, maybe more. If it's more tied to the niche and the way the biz has been run, maybe less.
Comment by Phil Collins on March 16, 2009 at 9:14am
X Sales (1.75) would be my guess for this market, but with such a margin could probably hold out for 2.0. As in the case of everything else...depends on the offer.
Comment by Don Firth on March 16, 2009 at 9:25am
Valuation should be based on a combination of top line and bottom line. In today's market, for a leading and expanding job board, the minimum value should be 3x top line or 12x bottom line.
For the right price, I'm sure that anyone would sell.
Looking at your XJobs board, the company is losing market share, which will affect it's valuation. The profit margin is too high. More funds need to be diverted to marketing and sales. This board will likely be valued at 1.5 to a maximium of 2x top line
Comment by Chris Russell on March 16, 2009 at 9:29am
Lets say market share is not eroding, sales are down due to job market conditions
Comment by Jeff Dickey-Chasins on March 16, 2009 at 9:34am
Then I'd go for a 1.3-1.5 x sales.
Comment by Art Koff on March 16, 2009 at 9:53am
I have some very unpopular opinions for owners of job boards--of which I am one.

First the good news.
I think after this recession is over there will be so many job openings that almost every job board will do extremely well so I would certainly not sell in this down market.

To come up with the real valuation for sales purposes of a job board in this market is not appropriate; however if a sale was NECESSARY I would value Xjobs at $975,000 which is 4x annual sales. I would be prepared to take less because of market conditions.

Now for the bad news

Facebook's new "social" classifieds Marketplace, powered by Oodle, seems to be doing well. They posted more than 22,000 listings in less than a week with no internal promotion.
and
EBay is test-marketing a re branding of its free-ad site Kijiji as "EBay Classifieds"

These added to the job board competition provided by Craigs List, Google and Amazon means the market is indeed getting more difficult.

It is my opinion that sometime in the not to distant future the major boards Monster and CareerBuilder will stop charging for postings and use their data base as their revenue generator. When/if this happens most smaller job boards will have a very difficult time staying in business unless they have prepared for this eventuality. We are doing just that now and have been doing so for the past year.


professional-network driven job search a.k.a. Facebook and LinkedIn are chipping away at job board

market share and ushering in a new era of recruitment?

professional associations are beginning to take advantage of this trend, creating social-networking platforms to better serve and tap their database of members
Comment by Chris Russell on March 16, 2009 at 10:01am
I cant even find the facebook classifieds in their new design. If its not easy to use/find its not a threat (at the moment)

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