According to the Salt Lake Tribune, Ancestry.com Inc., is doing really well when it comes to generating free cash per share. It is more successful at it than Facebook Inc. has been. This is precisely what makes Ancestry.com look attractive to potential buyers.
It has been said, in many news articles across the internet, that Ancestry.com is considering a sale. This isn’t a sale on the price of their membership, or on any of their services. Instead, it certainly appears that Ancestry.com could soon be for sale. Ancestry.com has been working with Frank Quattrone’s Quatalyst Partners LLC in order to find potential buyers.
News about the potential sale of Ancestry.com caused their shares to increase in value by 11%. According to data compiled by Bloomberg, Ancestry.com “is generating more free cash for each dollar of equity than 96% of the U.S. Internet and e-commerce industry”. “It is also almost four times higher than the yield of Facebook”.
That’s pretty interesting, when you think about it. In order to access the records and documents at Ancestry.com, you have to purchase a membership. You have to subscribe, and give them your credit card information. You can get a fourteen day free trial, but, even that requires you to type in the digits of your credit card.
Facebook can be used for free. Every time there has been the slightest rumor about Facebook moving to a system that would require people to spend money in order to access Facebook, the internet erupts in outrage! I’ve no idea what, exactly, Facebook is generating money from.
However, I can say this: I have lost count of how many people I know, personally, who use Facebook. By this, I mean people who I am related to, people who I went to school with or used to work with, and people that I have hung out with “in real life” outside of the internet. I can probably count on one hand the number of people who I know, in person, who use Ancestry.com. So, to me, it sounds like Ancestry.com is generating more money than Facebook is, despite having less users.
It is Ancestry.com’s ability to generate cash that makes it so attractive to private-equity firms. There isn’t any way to know which one, since the players in this drama are being kept secret for now. One can safely assume that Ancestry.com won’t be rolled into Facebook in the near future. Beyond that, nothing has been said about how a sale of the most popular genealogy website will affect its users.
Image by 401K on Flickr