Sep 27, 2017

The wily business model that catapulted Domain to the big time

Domain was founded in 1996 during the peak of Fairfax’s last rivers-of-gold period, but the business achieved significant digital scale and profitability when Antony “the Cat” Catalano returned to Fairfax in 2011.

Adam Schwab — Business director and commentator

Adam Schwab

Business director and commentator

For Fairfax shareholders, after a few false starts and a couple of would-be private equity suitors, the Domain spin-off is finally happening. After the separation, Fairfax shareholders will own 60% of the sort-of independent Domain business. Fairfax claims the main reason for the separation is to unlock “long term shareholder value” because Domain will have a separate valuation. This makes no sense as, in the long term, the market is efficient, and a dollar of earnings is a dollar of earnings. However, the separation will, of course, benefit speculators and profiteers who have pressured the Fairfax board to flip Domain for a quick return because, in the short term, the faster growing business will be graced with a higher-earnings multiple.

But far more interesting than the ham-fisted rationale for the separation, scrounged together by the poor investment banker or lawyer who was tasked with preparing the Scheme Booklet (note: your author has written many such booklet), is Domain’s controversial “Agent Ownership Model”.

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3 thoughts on “The wily business model that catapulted Domain to the big time

  1. Dog's Breakfast

    Thanks Adam.

    Effectively no different to commission based financial advice really.

    Conflicted, moi?

  2. Woopwoop

    If The Age breaks away from Domain entirely, maybe they can be more objective in articles about the housing market.

    1. AR

      With the objective being… ha, ha, ha, suckerrrrr!

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