Greenfield Online announced today that it has acquired Ciao AG. Greenfield Online had publicly stated its plan to move more aggressively into Europe, and we applaud its move to jump into the market with both feet by acquiring one of the largest European players. This is a synergistic acquisition, where both parties bring their strengths to the table and combine forces rather than duking it out trying to compete with one another. It accelerates Greenfield’s entry into the worldwide market much faster than if it had acquired smaller companies or built its own business from scratch.
Outsell’s Louise Garnett says this acquisition positions the combined company as one of the strongest leaders in the online market research market, especially in the outsourcing online panel segment, where services are sold to other market research firms and where the most robust growth is taking place. “Online panels are a double-digit growth spot in the market, with European expansion anticipated this year,” she says. Greenfield’s acquisition reinforces the findings Garnett covers in Outsell’s HotTopics on online market research, which will be published April 8 and available for purchase on Outsell’s Web site.
The price paid by Greenfield seems fair, with multiples of 6.8x revenue, 16.9x EBITDA, and 17.9x operating income. This makes the price on the most important criteria, profitability (16.9x) and cash flow (17.9x), higher than traditional information businesses but much lower than the 30+ multiples of 2004 results seen in the recent IAC/Ask Jeeves and NY Times/About.com deals. On revenue multiples, which are more variable, this deal is in the range of those other deals, which went for 7x and 10x 2004 revenue. Overall, the Greenfield-Ciao price is fair given where these companies play in the overall market for information.
Bottom line, this acquisition is a win-win-win all around: for both companies, for the market, and for the customers.
