Homesite.com.au which was launched a few years ago by News Ltd has been acquired by REA for a rather small AUD$1.6 million. REA could deo some really good things with this site. I would like to see it be a massive resource for users to go to to get hints and tips on how to improve their properties for sale or for just living in.
I have spent a little bit of time on this site over the years and over the years has seen some significant improvements. It is a good looking professional website that has some great hints ands tips for renovators, gardeners etc. The advertising is subtle throughout most of the site and I would like to see this stay the same.
The site is built using MySource Matrix an Open Source CM System that is developed here in Sydney Australia, from what I understand it is a very powerful system, but not for the feint hearted.
Now this is where REA can do some great things with this site……I wonder what they have planned? Ohhh I can see an REA Free to Air Digital TV Station coming on soon……!
Things are hotting up folks…….REA Live TV……………….come on Simon/Dave, now that would trump PBL!
5 Comments
Tom
The 1.6 million seems to be a joke knowing the value of homesite.com.au being the most popular home improvement site in Australia. Was that number a tax strategy?
Anyway, that deal makes a lot of sense, knowing renovation spend in NSW passed home buying spend in the last quarter.
The people at homesite and REA seem to know the synergies of both industries and definitely will consolidate the REA brand as the one stop shop for all housing needs of Australians.
It also opens great opportunities for companies like Ikea, Freedom or Bunnings to come on board when traffic to homesite.com.au might double up or triple with the new acquisition.
As a renovator, I would say the site has great content for home renovation, few content on garden improvement.
The site seems to start using the benefits of user generated content with its
Robert Simeon
Tom,
The trends, movements and acquisitions of media companies in the modern era ignite much food for thought.
Watch the newspaper businesses jump all over signboards, print brochures, dl cards etc etc.
Yes, the one stop shop is experiencing major renovations.
Nick Buick
I’ve always been curious as to how these type of purchases actually take place?
Peter do you know much about this side of things?
Is there a due-dilligence process that occurs (as with IPO?). How is the value of a website ascertained and what are the factors that influence this? Do you use business brokers? or are lawyers responsible for negotiating a sale? Or do the board members just run into each other on the golf coarse one day and say “Pssst – wanna buy us?”
I look at Tom, on MySpace in his crushed T-shirt and dork haircut and shake my head… “That guy has half-a-billion dollars right now for something he knocked up in his bedroom”
Peter Ricci
Well Nick, they can take all manners of scenarios. Most companies will get interest (especially ones from bedroom) and then seek guidance from companies that are experienced in these types of deals. The News Ltd purchase was a little different but companies like REA would of course perform due diligence. If you have something to sell you will also need to provide a range of information, including financial going back at least 2 years. But if you have something hot, then it can be a very quick process.
I have had a few interested in some things I have done, but I get bored with most of the games that get played sand just opt out.
Now someone would have to come to me with an offer based on what I tell them and then once an offer has been tabled on those facts and figures – I would provide all the necessary financials.
It also depends on your motivation, if you are only interested in money then you have a long road, more than likely the company would want YOU with your software but not always.
Anthony
Nick,
Sometimes the hardest part of this is establishing value. A site like homesite probably wasn’t generating too much revenue, but the synergy of fit, traffic and added with the perceived value they can extract is what they “speculate” on.
I am amazed at the multiples that are used – compare the Market Cap of REA with their published EBIT for last year and if my memory serves me correct is upwards of 30 times.
Makes 3 times the value of a rent roll seem quite insignificant.
Seek for PBL shows even higher i believe – and why they are entering the market for real estate.
Now these multiples seem much higher with a public company than a private company. So effectively if a public company buys a private company at 10 times – it then adds value to their shares by 30 times thus – the purchase is paid for – and then adds profit to shareholders more so.
Quite a simplified view – but in principle accurate i believe.