TechTarget IPO – CNET Comp – Solid But Unspectacular

By Douglas A. McIntyre Published May 15, 3:39AM EDT

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From Internet Outsider

Jason Jones: TechTarget’s IPO is scheduled for this week. The company provides online content about IT and targets buyers and sellers of IT products. It competes with IDG, CMP Media, and Ziff Davis Media. CNET is the most similar public comparable, although TechTarget has a slightly more enterprise focus.

Here are the quick details:

Proposed ticker: TTGT

Price range: $12-$14 (I use $13 for my assumptions)

Shares: 39m

Market Cap: $507m

Cash: $105m (post IPO)

Debt: $20m

Enterprise Value: $421m

’05 EBITDA: $13m
’06 EBITDA: $20m (+51%)
’07 EBITDA: $26m (+30%) – my rough estimate

’07 EV/EBITDA: 16x

This compares to CNET’s ’07 EV/EBITDA of 14x, growing EBITDA roughly 20%. The valuation seems reasonable but not overly enticing.

On the positive side, both TTGT and CNET may be acquisition targets for their high quality original content (see AMZN’s acquisition of DPReviews today as an example of M&A in the digital content sector). On the negative side, both firms have a heavy concentration of technology advertisers and are subject to fluctuations in the IT ad market.

The offering will be for 7.7m shares and will raise roughly $75m to be used to pay down debt, for working capital and for general business use. Morgan Stanley and Lehman Brothers will be the lead underwriters.

I think TTGT will have a solid but not spectacular IPO.

Posted by Jason Jones

http://www.internetoutsider.com/

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.