Judging by the calls he gets, recruitment consultant and publisher Peter Weddle says there’s every reason to believe that job boards are becoming the latest target for investors and buyers.
“Increasingly the view out there [is job boards are] one of the most successful areas of e-commerce,” says Weddle, who is also founder and executive director of the International Association of Employment Web Sites.
“Buyers are out there and they are asking questions,” Weddle says. Besides wanting to know what’s for sale, the buyers are looking for help figuring out formulas for valuing a job board, the nature of the deals that are being made, how to price goodwill, and more.
“My gut reaction is that the pace [of acquisitions] has increased,” says Weddle.
When technology job board Dice went public July 17, it raised some $217 million, more than twice the $100 million it expected according to its prospectus. The next day MediaBistro, which includes a job board for media professionals, was sold for $23 million . Jobing, a privately held Phoenix company, recently bought LocalCareers.com, a Milwaukee company that operates several small local and niche sites. It was Jobing’s eighth acquisition since launching in 2000. The terms weren’t disclosed.
Jobing’s CEO, Aaron Matos, says when he goes shopping, setting a price starts with the financials. Because many of the job boards have no significant EDITDA (earnings before interest, taxes, depreciation, and amortization), he says it’s difficult to value the opportunity using traditional measures.
Thus, he adds, the “strategic fit” is sometimes more of an influence on the price, which would also take into account growth rate, customer retention, traffic, resume counts, staff quality, and other metrics.
By way of example, Matos says “I paid a strategic premium for LocalCareers because of its ownership of dozens of premium state-level domain names.”
With all the activity — public and behind the scenes — Weddle says it made sense for the IAEWS to provide some guidance for its members, which are mostly job boards, on how to value themselves or prospective sellers.
“It’s unclear whether we are going to pull this off,” he frankly admits. “There’s a certain amount of wariness when you are dealing with private companies, as most of these are.”
Even so, there may be enough self-interest among the association’s several hundred job board members to convince them to participate in the study to be conducted by Kennedy Information. The methodology is straightforward: IAEWS members will be anonymously surveyed, while researchers will interview investment bankers, brokers, investors, and others, including executives who have bought or sold job boards. Specific data will be kept confidential.
What Weddle hopes will come out of the study will be formulas, not in the strict mathematical sense, but more like an ingredients list for a recipe. How the ingredients are combined and cooked will be up to the buyers and sellers.
Says Weddle, “It’s an emotional decision in many cases,” adding, the report will at least make available to the parties “the fundamentals of how these deals are put together and how the valuations are being decided.”
The report is scheduled to be presented at the IAEWS member congress November 14 in Orlando, Florida.