Verdict: $35.6 Million Insurance.com Buyout Wasn’t Just The Domain Name
Quinstreet is clear regarding what it purchased when it bought Insurance.com. It wasn’t just a domain name.
I just finished listening to Quinstreet’s investor conference call from last night, in which the firm noted it paid $35.6 million in total consideration for Insurance.com.
Now the big question, as others are debating right now: How much of this was for the domain name? Was this a domain name purchase at $35.6 million?
The answer to the second question is pretty clear: no. The value wasn’t just in the domain name. On the call, Quinstreet repeatedly referred to the buyout as a “media asset”, and that was “a web site, media, and technology assets”.
It’s notable to understand the history of Insurance.com. It was previously run as an insurance agency, actually selling some policies direct to clients. Quinstreet didn’t buy the agency. Contrary to earlier notes, Quinstreet didn’t layoff anyone since of the buyout; the note of layoffs was from the owner of the agency, which Quinstreet did not acquire.
Quinstreet usually doesn’t acquire “revenue” in acquisitions. It states it “buys media and then turns it into revenue”. The average cash-on-cash return for acquisitions is 35% at the firm. The insurance.com transaction would return 20%-30% on the firm’s conservative buyout model, although Quinstreet states it’s blowing through that number. The buyout model assumed the loss of a lot of affiliate revenue and leads, but very little of that has been lost.
In fact, in response to an analyst question “aren’t you just buying the domain name”, Quinstreet responded “this is not a domain name”. It wants to build on the existing content and platform.
Bottom line: Quinstreet bought a web site that has a killer domain name associated with it. That killer domain name is one of the reasons Insurance.com is what it is today. But if another site got the same amount and type of traffic, Quinstreet probably would have paid the same thing.
