Biz Dev in NYC by Rob Tsai

During the Friday conference call announcing Google’s $3.1 billion purchase price for Doubleclick, several analysts tried to get information from Google on how they arrived at the valuation, including asking for forward looking and historical revenue and EBITDA for Doubleclick’s business.

Google preferred not to comment on Doubleclick’s standalone performance, except to say that they foresee substantial “synergies” to drive value that make the purchase extremely attractive to them. The blogosphere is abuzz about what these synergies might be – and merit a post in its own right. See Fred Wilson, Scott Karp, Hipmojo, Donna Bogatin, Phil Wainwright, and Sim Simeonov.

Louise Story and Miguel Helft report in the New York Times 4/14/07 article “Google Buys an Online Ad Firm for $3.1 Billion”:

A highflying stock in the late 1990s, DoubleClick was an early pioneer in online advertising and was one of the few online ad companies to survive the burst of the dot-com bubble. In 2005, it was taken private by two private equity firms, Hellman & Friedman and JMI Equity, in a deal valued at $1.1 billion.

Since then, the company has sold two data and e-mail advertising businesses and acquired Klipmart, which specializes in online video. DoubleClick generated about $300 million in revenue and $50 million in earnings before interest, depreciation and taxes last year, mostly from providing ads on Web sites.

So based on these numbers, it puts the deal at about 10x revenue and 60x EBITDA (trailing), if you believe those financials.

One way to sanity check those estimates is to look at the last publicly filed financials for DCLK on Edgar prior to being taken public by Hellman & Friedman.

For the quarter ended March 31, 2005, Doubleclick reported $76 million revenue. Of this, $50 million was their “TechSolutions” operating segment containing Ad Management (DART for publishers service, DART for advertisers service, and DART enterprise ad serving software product), Marketing Automation and Performics (affiliate and Search Engine Marketing). The other $25 million or so was their data division (mostly Abacus) that they sold off.

So, if their “Techsolutions” operating segment was at a $200 million run-rate two years ago, the NY Times’ reported numbers imply roughly a 50% revenue growth over 2 years.