British broker IG Group recently bought DailyFX from FXCM.

DailyFX for years had been a stable generator of business for FXCM, and it is fair to say that it wouldn’t have considered selling the site if it wasn’t for the debt burden FXCM has due to the SNB issue and the resulting Leucadia deal.

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IG paid $40 million for the site while FXCM continues to get advertising space targeting North American audiences. Bear with me while I work through some of the numbers to arrive at an estimated fair value for the publishing operation.

With 4.2 million unique monthly visitors and the cost of generating this type of traffic 0.25 USD per visitor at most, the value of this traffic without anything else considered is estimated in the range of 12.6 millionUSD per year. The business value to IG is less. Since traffic to a publisher is not worth anything without activating it for the broker, we could give a conservative estimate of 2% conversion from DailyFX to IG, minus the conversions from North America which FXCM keeps, we would get around 63,000 conversions.

If we estimate the value of those  Leads  Leads Leads or lead generation are an essential component of marketing and powerful tool by brokers. In its simplest form, leads can be defined as the outreach of customer interest or enquiry into products or services, most often associated with brokerages.These can be created for purposes such as list building, e-newsletter list acquisition, or for sales leads. Amongst marketers, such lists are one of their most important assets and instrumental to sales.There are a variety of methods for generating leads that traditionally fall under the mantle of advertising. However, this may also include non-paid sources such as organic search engine results or referrals from existing customersHow Are Leads Generated?In the FX space, nearly every brokerage has their own list of leads. How exactly these are generated varies to some extent. Most come from a composite of sources or activities.Specific parameters on the Internet such as personal referrals, telephone calls, or even conference attendance either by the company or telemarketers, through advertisements are the most common examples of this.Indeed, content marketing, search engine, and events are all effective ways in bolstering leads over time and account for the highest concentration of lead generation.Leads are also a powerful took by marketers to pursue new clients. This can involve customer relationship management (CRM) technology or follow ups in the form of contacting.The goal of these contacts is the conversion into a client. Simply obtaining a list of leads does not always correlate to business. This is where sales, follow ups, or other methods come into play. Leads or lead generation are an essential component of marketing and powerful tool by brokers. In its simplest form, leads can be defined as the outreach of customer interest or enquiry into products or services, most often associated with brokerages.These can be created for purposes such as list building, e-newsletter list acquisition, or for sales leads. Amongst marketers, such lists are one of their most important assets and instrumental to sales.There are a variety of methods for generating leads that traditionally fall under the mantle of advertising. However, this may also include non-paid sources such as organic search engine results or referrals from existing customersHow Are Leads Generated?In the FX space, nearly every brokerage has their own list of leads. How exactly these are generated varies to some extent. Most come from a composite of sources or activities.Specific parameters on the Internet such as personal referrals, telephone calls, or even conference attendance either by the company or telemarketers, through advertisements are the most common examples of this.Indeed, content marketing, search engine, and events are all effective ways in bolstering leads over time and account for the highest concentration of lead generation.Leads are also a powerful took by marketers to pursue new clients. This can involve customer relationship management (CRM) technology or follow ups in the form of contacting.The goal of these contacts is the conversion into a client. Simply obtaining a list of leads does not always correlate to business. This is where sales, follow ups, or other methods come into play. Read this Term to be at 50 USD a piece, the immediate value to the business comes to 3.15 million USD per year. Add to that ‘brand awareness’, added value to IG customer base and ‘SEO’ value, and 7.5 million in value per year isn’t unreasonable. So we can say, from 7.5 million to 12.6 million is fair yearly value, at an industry average multiple of 3 times that comes to between 22.5-37.8 million in estimated price. While IG undoubtedly has had access to better data then the guestimates above, based on the information available it seems that it paid above market for the asset.

The other question to ask is, could IG have started a successful operation itself for 40 million USD? The answer is a resounding yes, with the caveat that it could be a risk (question is always if the strategy works or not) and it would surely take a lot of time. I think we will all see that it would have been possible for IG when FXCM gets on its feet and starts a competitor to DailyFX. My guess is that it will get back to the traffic levels currently enjoyed by DailyFX within 2-3 years.

So in summary, in my opinion it is likely that IG paid at the top end of the range. Good for FXCM. However, this move does show the importance smart brokers place on operating publishing operations. There are many reasons why brokers should consider such strategies and I have discussed them at length in the past.

With this  Acquisition  Acquisition Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There are many ways to acquire or to take the acquisition of property and services. How Companies Utilize AcquisitionsIn finance, the term acquisition is most often used when referring to taking control of a company. An acquisition can be either an agreed deal or a hostile takeover. Companies also may acquire units of a company, property, or other assets. An acquisition is when one business, person, or company purchases most if not of another company's shares to gain control of that company. Buying more than 50% of a target firm's stock and other assets allows the acquirer to make decisions about the newly acquired assets without the approval of the company's shareholders. In finance, there are several types of acquisitions that one speaks of when referring to Acquisitions and Mergers. A horizontal acquisition is when two companies come together with similar products/services. Conversely, a vertical acquisition means two companies join forces in the same industry, but they are at different points on the supply chain.Moreover, a conglomerate represents two companies in different industries join forces, or one takes over the other to broaden their range of services and products. Finally, a concentric acquisition occurs when companies will share customers but provide different services. Acquisition means acquiring or taking possession or the securing of property, services, or abilities. To put it simply, it is the act or process of acquiring or gaining. You can acquire a work of art, you can acquire an ability such as speaking another language, you can acquire a business or shares in a company and you can acquire an accountant's service. For example, you can acquire a new car. In a broad sense, Acquisition can mean the act of taking ownership or possession of something. There are many ways to acquire or to take the acquisition of property and services. How Companies Utilize AcquisitionsIn finance, the term acquisition is most often used when referring to taking control of a company. An acquisition can be either an agreed deal or a hostile takeover. Companies also may acquire units of a company, property, or other assets. An acquisition is when one business, person, or company purchases most if not of another company's shares to gain control of that company. Buying more than 50% of a target firm's stock and other assets allows the acquirer to make decisions about the newly acquired assets without the approval of the company's shareholders. In finance, there are several types of acquisitions that one speaks of when referring to Acquisitions and Mergers. A horizontal acquisition is when two companies come together with similar products/services. Conversely, a vertical acquisition means two companies join forces in the same industry, but they are at different points on the supply chain.Moreover, a conglomerate represents two companies in different industries join forces, or one takes over the other to broaden their range of services and products. Finally, a concentric acquisition occurs when companies will share customers but provide different services. Read this Term, IG has filled an important hole in its marketing strategy in one move, which is commendable in itself.