I’m with Sam 100% on this quote “Ultimately, a company is worth what a buyer and seller agree on”

Fernando, your so wrong in so many points that doesn’t make any since to highlight any of them.
Markus and his POF have been called several names in the past but I don’t think that “parasite of Google” has been one of them.
There goes another potential client to your personality test Fernando!

Now, coming back to the subject.
“In my opinion”
The only 3 good things POF has to offer is massive traffic, a very large database of active subscribers and Markus publicity.
Adding those 3 together + any large corporations resources will = lots of lots of $$$$ in revenues. Due to the quality of online daters on POF, the so-called large corporation won’t be in the same industry or market. In other words IAC/Match.com will never buy POF. On the other hand, POF has a conversion rate of 15% to paid dating sites where the majority are from Match.com (based on Markus latest research)

To get a realistic price to any website we need to take in consideration several things:
The size of the market, a 5 to 10 years market study and annual market growth
Take in consideration any novel intellectuals properties the company has and how hard it is to improve upon it.
How much capital has bee invested, how much revenues they are making and the annual growth of the site.
Comparisons to competitors’ sites
Comparisons of same or similar sites that have been acquired in the past 5yrs
And the this list can be much bigger…

Most of these requirements POF doesn’t have or can’t produce, that’s why Markus always go the extra mille to show the value of his site.

At the end we come back to square #1
Sam’s quote “Ultimately, a company is worth what a buyer and seller agree on”

That’s was my 2 cents

Again with respect, I think you are way off base. Less living in an ivory tower and more living like an entrepreneur would be better! ;-)

Dating sites (good, profitable ones) cannot be compared to “many (overvalued) dot com companies”. This is an apples-to-oranges comparison.

Assume POF earns $15M/year. Assume also profit is around 85% of that (what costs does he have?). That = $12.75M. Why would he sell for a mere $22.5M? That’s only a year and 9 months of earnings! Yes, there are tax rates to consider, & cap gains is half the tax rate (in Canada). So, let’s say he actually gets 3.5 years earnings up front. Why sell for that? It makes no sense (at all).

Sure, POF’s main success factor is Marcus. However, a large media company won’t care. They want the eyeballs (as much as the ad earnings). To describe it as a “parasite of Google” is a bit much. Google may have a nice motto, but it is in the business of making money, not permitting “parasites” to feed off of it.

If advertisers weren’t getting their money’s worth on POF, they wouldn’t be there (or with Google).

Ultimately, a company is worth what a buyer and seller agree on. However, you can realistically value any company. And, selling for your numbers makes zero sense.

As I said before, just check sales of dating sites in the last 3-5 years. Not the average-over-valued-dot-com-with-no-business-model-in-1999 sale; rather, profitable dating sites bought by serious companies with smart people working for them.

USD100M valuation / USD4.8M profit == 20.8 years to recover the initial investment
(Without taking into account depreciation, inflation and others, the possibility of reselling the site to other prospective buyer)

20.8 years to recover the initial investment it is like a real state investment!

Regards,

Fernando Ardenghi.
Buenos Aires.
Argentina.
ardenghifer@gmail.com

I suggest to wait and see because many dot com companies were overvalued
and
PoF is an special case:
it is a site mainly a parasite of Google.
his owner seems to be the only person who exactly knows how PoF works, i.e. without his day to day management, will PoF be able to continue operating?

POF has a different model, as it is not based on subscriptions. However, comparing sales of sites with lots of eyeballs, he would likely expect to make somewhere north of $100M, perhaps even as high as $250M.

No more than
1.5 times its revenue
OR
15 times its profit (earnings after taxes, depreciation, etc)

Prospective Investors should carefully analyze PlentyOfFish Media’s tax declaration.

I wish the survey had asked more questions about how many dummy/fake/repeated profiles users have.

I remember PlentyofFish’s owner had previously said:

“Everyone lies about what they want, or they don’t know what they want,” he says. “I look at who they’re messaging, not what they’re saying.”
From
http://www.canada.com/topics/news/politics/story.html?id=6ea70f26-747a-45b2-a111-671de5b398d8&k=44884&p=2p=2

Regards,

Fernando Ardenghi.
Buenos Aires.
Argentina.
ardenghifer@gmail.com