Private equity firms are dropping out of the bidding for Zagat Survey, the mini-empire of amateur restaurant reviews founded in 1979 by Tim and Nina Zagat. The Daily Deal quotes PE sources complaining that the asking price, $200 million, or roughly 20x the company’s $8-$10 million Ebitda, is way too high.
The Zagats’ hired Goldman Sachs in January to seek a buyer, but The Deal says prospects are balking. Previously-noted potential strategic buyers for the company include IAC, whose CEO is otherwise occupied; Bruce Wasserstein, owner of New York Magazine, and Rupert Murdoch.
The Zagats sold a third of the business for $31 million in 2000 at the height of the dot-com boom, implying a valuation of $100 million or so. Investors included General Atlantic, Kleiner, Perkins and Allen & Co. It’s a great brand, still incredibly under-leveraged on the Web, and a successful model for user-generated content. But is it worth twice as much as it was in 2000?
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