The rumor mill is heating-up in influential circles around a heightened level of motivation The Ladders is allegedly showing to get acquired.
Granted, rumors are just that, but there are at least two recent actions that may give us some insight into their desire to unload.
1. Sticking it to employers. Late last year, TheLadders decided to start charging employers. They had already been charging job seekers. Creating a new revenue stream like that helps increase value. Thus, more money in an acquisition.
2. National TV ad campaign. Remember when dot-coms in the ’90s would embark on memorable and expensive ad campaigns to help spike their value (usually for get-rich-quick IPOs)? This is probably no different.
Hoover’s estimates yearly income at $7.4 million. If that’s true, and recent acquisitions are any indication, The Ladders might expect somewhere between $20-$30 million in a sale.
In a hot buy-and-sell market, will TheLadders be next? Definitely maybe.
Popularity: 10% [?]
February 20th, 2008 at 1:20 pm
I recently read an article that made the point that all businesses should operate as if they are for sale. If embarking on a national ad campaign to drive up the value makes sense in a period when TheLadders may be for sale, then it they should do so even if they are not for sale. Anything that drives up the value of the business makes sense, according to the article, whether you’re for sale or not.
I think that the article made some good points but failed to adequately distinguish between short- and long-term value. A national ad campaign may drive up the short-term value of the business by boosting traffic and revenues but once the funds for those types of campaigns dry up then so does the traffic and revenues associated with those campaigns. No long-term traffic or revenue boost, no long-term boost to shareholder value.
February 20th, 2008 at 5:49 pm
Joel –
If someone bought TheLadders for $30 million it would be steal. Monster is valued at 25x earnings, Dice is also – that would give TheLadders a value of $185 MILLION Dollars if their $7.4m in net income is correct which I think it might be. A nice payday for Cenedella and Matrix Partners.
Compared to many other job boards in the space achieving such hefty valuations with relatively little to no revenue or income compared to price I think theLadders might even get more than $200m if they play their cards right. A lot of these job boards are being bought right now too so it is possible it could be more.
Keep on blogging – you are one of the best around.
Cheers
Mark Newman
CEO, HireVue
February 20th, 2008 at 5:58 pm
Correction –
It says Hoovers is $7.4m in sales (I’ve heard it is much higher BTW) not earnings. I was wrong. Earnings is 25x but revenue multiple is 4-7x like you were hitting at. I don’t think Matrix Partners would only go for a 20-30m exit though. I heard that TheLadders was close to $40-60m in revenue oddly enough so they might still be in that $150-$200m valuation. Hoovers is usually off.
Cheers
Mark Newman
CEO, HireVue
February 21st, 2008 at 5:08 pm
Very revealing is the carny-barker junk-mail campaign Ladders is using to carpet-bomb the market. Any party looking to acquire Ladders should look closely, because the cattle are being watered to drive up their weight just before delivery and slaughter. The quality of the junk-mail reveals that Ladders is targeting the way-sub-$100k job-hunter market. Executives, indeed. http://corcodilos.com/blog/13/one-tiny-100k-mistake
Also revealing is the company’s recent use-burn-and-dump campaign to start an executive-resume-writing business. Ladders partnered with professional resume writers, picked their brains, established a certain quality level, then slashed them as the biz took off. The number of ticked-off, top-level resume writers telling their stories all over the Net suggests any buyer oughta do a bit more due diligence on that new “business.” Several of these ex-partners claim client data they were given revealed that around 25% of resume customers were below Ladders’ “$100k” level. If so, I’d expect resume revenue to drop dramatically. Especially if the new resume bullpen writes as well as Cenedella does in the “member e-mails” he sends out.
There should be little mystery to this. Cenedella came from HotJobs, another data base company that went the same route. These are not “career” businesses in any way, shape, or form — any more than Monster is. They are data base companies selling recycled records. When your company’s product doesn’t work, e.g., CareerXroads reports Monster’s ability to fill jobs is about 2%, then the market value of the company is a figment of some analyst’s short-term imagination.
Ladders may have started out with a relatively elite base of members. The new marketing campaigns are cattle calls, and what that should tell any prospective buyer is that this Ladder only goes down.