In October I reported that iPhone application development company Taptaptap was selling its popular Where To? app. At the end of November Taptaptap announced the app had been sold and finally yesterday the details of the transaction emerged.
Where To? was sold to long-time Mac developer, and founder of equinux, Ortwin Gentz for only $70, 000. I think Gentz got himself a deal here as Where To? brought in over $200, 000 in revenues in the first 3 months of Apple’s app store going live–at a price of $2.99. But there is more to the story I wasn’t aware of initially. Taptaptap co-founders Sophia Teutschler and John Casasanta apparently had a difference of opinion in the strategic direction of the company and a quick sale was needed for the two to part ways.
Casasanta feels the valuation is fair though. Gentz valued the application using an earnings-based valuation method known as EBIT multiples–EBIT is short for earnings before interest and taxes–coming up with an approximate figure of $45, 000 to $55, 000 in sales revenues annually. With an acquisition price of $70, 000 the multiple here is only 1.5. If you look at acquisition prices for a company like MySpace the earnings-price multiple in that case was 27. But as Gentz points out, he was purchasing a single product rather than a company, and forecasting future earnings in a market as new and dynamic as the app store is nearly impossible.
In any case, Where To?–which uses GPS to find nearby points of interest–has relaunched in the app store and will now be branded under FutureTap.
