Online deals show timing matters

What a week it’s been in the media sector! First, Fairfax unveils a savage restructure with 1,900 job losses, then News Limited responds with a restructure that will see 19 divisions shrunk to five and an anticipated 1,000 job losses.

And this morning, Australia’s third largest newspaper group, APN News & Media, answered with its own deal – it’s agreed to buy a controlling stake in online retailer BrandsExclusive for $36 million.

It’s the second big tech deal of the week, after Alan Kohler sold his online publishing group Australian Independent Business Media to News Limited for around $30 million.

And it comes after group buying site Deal.com.au bought Ouffer Australia earlier this week, and OzSales bought Buyinvite a few weeks ago.

Economic conditions might be patchy, but it’s great to see a group of pioneering entrepreneurs are cashing in with some substantial deals.

In the main, these are businesses that are less than five years old, which does underline the fact that there is still a lot of money to be made very quickly from online businesses, provided you can crack the magic recipe of strong user numbers, strong revenue streams and a market position that can be defended.

Of course, finding that mix is no easy ask. So to the likes of Alan Kohler and BrandExclusive’s Daniel Jarosch and Rolf Weber, we can only say – bloody great work!

However, there is also an important trend to be drawn from the fact that these entrepreneurs are willing to sell out while their businesses are still young.

While there might be lots of reasons that the likes of Kohler and the BrandsExclusive boys have sold out – who could blame them for taking some cash off the table – in both of these deals the founders noted the need to get the support of a larger company to grow.

“BrandsExclusive is about to enter our next significant stage of growth. We believe we have found a fantastic partner in APN – a local partner who shares our bold vision and with whom we can work with collaboratively to help shape the future of ecommerce in Australia,” Jarosch said this morning.

“We are excited about our new future. AIBM will remain independent and its existing culture will be preserved,” Kohler wrote yesterday. “…And most importantly, the business will grow – we’ll be launching new Spectators and new additions to Eureka Report to better serve Australian readers.”

Now, there’s a bit of spin there. But the underlying message could be interpreted as: get big or get out.

Or at least, we had to get help to get big, or we feared we might eventually have to get out.

It’s something we’ve seen throughout the (relatively) short history of internet businesses. With a few gigantic exceptions, most businesses seem to hit a point where the founders decide that there is only so far you can grow an online business without bringing in the scale, reach and resources of a bigger company.

And, fortunately, there always seems to be a large company – be it a media company today or telcos in the past or retailers in the future – heading in the opposite position. That is, a big company trying to find an emerging online business with the new business model, new revenue streams and entrepreneurial zeal.

Like comedy, business is really all about timing, isn’t it?