This past year has been a very eventful one in the M&A arena, with many of web 2.0's biggest names being snapped up. A few stand-outs include the likes of YouTube, Photobucket, Feedburner, Last.fm, and StumbleUpon.
Yet, there still remains a number of juicy, mouth-watering targets available on the market. This may be a great opportunity for traditional media, as well as some of the Internet behemoths, to make a leap into the new web world. Let's explore some of the most sought-after names still available on the market.
Digg: Traditional media is losing ground fast. Social news sites and blogs are starting to attract a lot more traffic and attention, as people turn to these alternatives for news. Digg is a pioneer in this space and leading the charge. Close rival Reddit was purchased late last year, indicating interest in the space. Although Digg will be looking for a substantially higher price tag, my intuition tells me that the company will not refuse any offer over $150 million. Potential buyers include Yahoo, NYTimes, MSN, or any major company looking to add a social spin (i.e. community-powered voting) to their news section. Other companies of interest in the space include Newsvine, NowPublic, and ShoutWire.
Note: Now may be a good time for any company looking to acquire Digg. My guess is that the recent HD-DVD meltdown may have eroded a significant portion of Digg's current market valuation (at least in the short term). This unfortunate situation pitted Digg vs. the community. In the end, the company was forced to let a submission containing an HD-DVD key reside on the site and deal with a cease-and-desist order. The community backlash coupled with a potential lawsuit most certainly shrunk the valuation to some degree.
Technorati: Blogs are undoubtedly helping to shape the new media landscape. Having said that, users need to be able to search these blogs. Technorati is the status quo blog search engine. This popular search vertical is here to stay. Competition is lacking (with the exception of Google Blog Search). This is inexcusable for any major search engine. Yahoo and/or MSN may want to consider the addition of Technorati to strengthen their core search offering.
Netvibes: Personalized homepages are not a fad - their long-term future is certainly optimistic. Netvibes is an AJAX-ified start page that offers information aggregation and page customization. Such an offering would provide a great doorway for any portal or media site. Though monetization of the homepage itself may be difficult, an extended service offering could generate revenues via this customer acquisition tool. Potential buyers include major portals lacking such an offering, such as About.com or Lycos. Though Google, Yahoo, and MSN all offer such a service (Google IG, My Yahoo, Live), Netvibes also brings to the table a large user base and, perhaps, a better service. Other companies of interest in the space include Pageflakes and Protopage.
SimplyHired: Job aggregators facilitate the job-seeking process by pulling postings from numerous sources. This saves valuable time and hassle for the searcher. Traditional job sites lack breadth, depth, and diversity. For this reason, aggregators are able to attract huge traffic and a diverse audience. Any current portal or high-traffic property looking to add a job listing component may want to contemplate SimplyHired. Potential buyers include Google and traditional publishers. Other companies of interest in the space include Indeed and Jobster.
Spock: The growth and success of Google goes without saying. This means that start-ups looking to enter the 'search' space are forced to choose a niche, if they want to stand a chance at competing. For this very reason, vertical search has exploded onto the scene this year. One search vertical, people-search, has garnered a huge amount of press recently as several new players have entered the market. One in particular, Spock, has attracted the most attention and scrutiny. This stealth start-up had been operating under a high level of secrecy until recently. Potential buyers include any major search engine looking to enter into people search vertical. Other companies of interest in the space include ZoomInfo, Wink, and ex.plode.us.
BONUS - Facebook: This social network continues to dominate the headlines and expand at a blistering rate. Along with this growth has come an unprecedented amount of acquisition rumors and speculation. However, Mark Zuckerberg has repeatedly stifled such rumors, indicating that a sale is not in-store. Even if an acquisition was contemplated, a steep price tag would likely ward off many potential acquisitors. Facebook would be ideal for any large Internet player with deep pockets, looking to tap into a juicy database of demographic information. Yahoo is a front runner, but Google or MSN could also provide a good fit.
Other companies that were considered for the list include:
With a limited number of high-quality names still available, it will be interesting to keep an eye on M&A activity in the near future. Though many of the top names have already been scooped up, there still remain a few gems. Fit and congruence are two important factors that cannot be overlooked when considering an acquisition. If the purchase does not tie into corporate goals and strategy, then it should be dismissed. If a deal is forced, it may be a waste of time and valuable resources (both financial and human). Nevertheless, a smart acquisition can provide added depth to any company offering. We've witnessed this with MySpace's strategic purchase of Photobucket. It made sense - the fit was there. In the end, it was an easy decision.
Any companies missing from this list? Any companies that should be removed?
Comments
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Uh, Spock hasn't even launched yet.....
Posted by: Mike | July 24, 2007 9:30 AM@Mike: That hasn't stopped takeovers in the past. Remember NewRoo.com, for example, which was bought even before their first public demo, I think (and is now MySpace News ... or presumably).
Posted by: Josh Catone | July 24, 2007 9:42 AMGreat Article. How come you have left out some of the alternative search engines (Powerset, Wikia and Haiku) and alternative social networks (Bebo and Hi5)
Posted by: valleyblogzine | July 24, 2007 10:09 AMIf the list includes attractive but not for sale firms, how about Automattic (WordPress)?
Posted by: Andrew | July 24, 2007 10:49 AMOnly $150 million for Digg? Digg must be worth more to a major media organization than Last.fm was to CBS ($280 million).
I can't wait until Rupert Murdoch gets into social news selection/bookmarking!
Posted by: Greg J. Smith | July 24, 2007 10:59 AMA very interesting and insightful article that really sums up the landscape of the web for this year. Personally, I don't think Facebook will sell, because they seem to have an executive that is just focused on building the next great IPO. Who knows if they will be the next Friendster or the next Google.
One question Mike, was Last.FM acquired by CBS or NBC? I've heard both companies used in different news reports.
Posted by: Brad Jashinsky | July 24, 2007 11:01 AMI agree with you most on Technorati especially for the sheer size of the blogosphere and the fact that there is clear indication that given their current level of resources, management and otherwise, they are not able to cope.
On the other hand though, the question as to how you monetize effectively remains front and center.
Posted by: Adrian Keys | July 24, 2007 11:15 AMInteresting that your top choice is Digg.com, because the rumors are no longer that.
Microsoft will announce they are purchasing Digg.com later this week, not sure on the amount or the intention, or how it will change digg...
Posted by: ReadingWritingWeb | July 24, 2007 12:17 PM@valleyblogzine - The search engines mentioned are relatively new to the web; I'd wager that a bit more exposure will likely put them on the acquisition map. As for the social networks, I just think that Facebook has much more upside potential than the others, making it a more likely takeover candidate.
@Andrew - Automattic seems like a very strong stand-alone property.
@Brad - Last.fm was bought by CBS; see the link in the post.
Posted by: Aidan Henry | July 24, 2007 12:19 PMCheers,
Aidan
I'm surprised Yelp wasn't higher on this list. I'm not sure what their books look like, but that site is amazing. The user community is VERY passionate and it seems like the kind of site that once you've discovered it, you don't use anything else. Citysearch is dead for me.
Posted by: Ryan Stewart | July 24, 2007 1:36 PMGreat post and interesting fodder to put out there. ha.
Along the lines of online video, I think Gemstar or On2 are the next takeouts in my humble opinion. Who knows though.
I can't see FB being bought out for less than 9 or 10 billion but after reading P Thiels comments about what price they would entertain offers it makes me think they are ramping up for talks with MSFT and GOOG.
Posted by: john griffin | July 24, 2007 1:55 PM@ReadingWritingWeb
Now that is news. I guess we'll have to wait and see, but it would be interesting.
Posted by: gettit | July 24, 2007 2:22 PMThe real bargins in there will be the few that didn't take venture funding.
For example, I know Protopage didn't take venture capital, so would be a very tasty acquisition.
Posted by: Dave Mattin | July 24, 2007 2:23 PMprotopage looks pretty simple and easy to understand. had never heard of it. probably bc it hasn't taken money.
Posted by: john griffin | July 24, 2007 5:20 PMI think Yahoo! would have the most to gain in regards to making acquisitions, but how much cash do they have on hand?
If I were to rank the candidates in terms of which would be most important to Yahoo!, it would be:
1). Yelp - Someone is going to snatch Yelp up, and whoever does will have a distinct advantage in the local listings/search space. If combined with Yahoo's previous acquisition Upcoming, Yahoo would have local information.
2). SixApart - Yahoo 360 is failing pretty miserably, so Yahoo! needs to act. Rumor has it they have a new social networking site in development, but SixApart would give them some strong established communities (Vox, LiveJournal). Having TypePad and Moveable Type as part of their portfolio would just be icing on the cake (although they might want to consider spinning off Moveable Type).
3). Digg - If they could get it for the $150 million you mention (or thereabouts), it would be a steal. Yahoo! could integrate Digg into Yahoo! News and their other properties. I could also see a mash-up of Del.icio.us and Digg being very desirable to both communities.
4). Technorati - I agree that Yahoo! needs a blog search tool, but they must make sure they don't overpay for Technorati. Managed smartly though, Yahoo! could integrate Technorati results into Yahoo! News.
5). Spock - This may or may not be desirable to Yahoo! depending on what sort of challenges it receives from privacy advocates. If Spock works those out, then Yahoo! should grab it. A lot of searches done on the web are for people's information.
I'm leaving Facebook off this list because I think it's hugely overpriced right now. Yahoo! could grab one or more (perhaps all) of the above companies for what they would have to pay for Facebook. At this time, Facebook's open platform is still unproven. It has a good buzz now, but give it a couple of months and I bet people will forget about it. I for one don't know why I would use apps on Facebook versus just going to those websites directly.
Netvibe/Pageflakes aren't exactly needed, but Yahoo! had better ramp up development on its own My Yahoo! beta (third party widgets would be nice).
That's just my 2¢.
Posted by: Scott K | July 24, 2007 5:51 PMP.S. I think Plaxo could make an attractive acquisition target.
Posted by: Scott K | July 24, 2007 5:52 PMScott K wins the thread :)
Yelp is the r0x0rs
=Ryan
Posted by: Ryan Stewart | July 24, 2007 8:46 PMrstewart@adobe.com
Thanks Ryan. Unfortunately my proof-reading skills suck as evident in my paragraph about Yelp. I meant to say that if Yahoo combined Yelp and Upcoming, then Yahoo would have a wealth of local information that would be hard to top.
As for mergers and acquisitions (if they have to happen), I always thought Apple and Adobe should tie the knot. That's particularly true now that the iPhone could benefit from Adobe AIR. Seeing that you work for Adobe in that area, I'm curious what your thoughts are on that.
Posted by: Scott K | July 24, 2007 10:04 PMHi
Posted by: Nir | July 25, 2007 12:24 AMvery interesting list, I'll keep it for a closer watch.
will be interesting to see how many of these web sites will go on sale.
Hope to see our sportsevents365 in the next 100's
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Posted by: Biswaroop Todi | July 25, 2007 12:46 AMI thought SimplyHired was bought by Google...or may be it was just talks...
http://web2innovations.com/news/2007/May/SimplyHired.php
Posted by: web 2.0 innovations | July 25, 2007 5:14 AMi agree about the digg selling for only 150m is 'el cheapo' - it will be sold somewhere under 1 billion or close to 500 m, huh?...
and hey, Aidan, what about Snap - they're everywhere today!! team behind that product has done some sales before - picasa, overture..
Posted by: Helmut | July 25, 2007 6:20 AMThe question is - if sites like second life or weblo will take off and be on the M&A list???
Posted by: omadsense | July 25, 2007 12:33 PMweblo info: http://www.omadsense.com/id98.html