Get Paid to Participate - up to $1 per post!     Twitter     Facebook     Google+
Hosting Discussion
 

forgot password?



Reply


Old
  Post #1 (permalink)   08-16-2007, 06:18 AM
HD Newbie
 
Join Date: Aug 2007
Posts: 1

Status: hellsa is offline
Hi,

I'm considering buying a hosting company and I'd like to get a sense of the multiple of earnings that small (100 or so clients), non-public companies tend to go for. I know that EBITDA is not the only thing to consider, that an analysis of the income statements is necessary and that multiples are not necessarily accurate predictors of a company's true value but I need a starting point.

Any help or resources you can point me to would be appreciated.

Thanks!
 
 
 


Old
  Post #2 (permalink)   08-16-2007, 04:49 PM
HD Wizard
 
Blue's Avatar
 
Join Date: Oct 2003
Location: PEI
Posts: 2,713

Status: Blue is offline
There are many factors to consider.
The main one I would consider is the renewal rate of the clients.

There are lots of fly by night operations out there that promise the world and gain dozens or even hundreds of clients but have no retention rate.

I would say that, depending on the client retention rate, a hosting company is worth 3 months to 6 months gross revenue.

That is just for clients. Other things such as software, websites, domain etc. have to be taken into consideration as well.
__________________
Hampshire Hosting
Affordable Shared and Reseller Hosting
 
 
 


Old
  Post #3 (permalink)   08-16-2007, 07:40 PM
HD Wizard
 
ldcdc's Avatar
 
Join Date: May 2004
Location: Ploiesti
Posts: 3,112

Status: ldcdc is offline
Customer lifetime value would be the key for me, but it would be hard to estimate accurately if we're talking about a very small business with little history. This higher risk would result in a diminished offer.
 
 
 


Old
  Post #4 (permalink)   10-13-2007, 09:42 AM
HD Addict
 
Join Date: Jan 2006
Posts: 142

Status: rebelnet is offline
here is the main problem, and take it from a company that has purchased 5 hosting companies in 4 years. - The market value will be different from company to company

typically in the hosting business today around 7/8 months revenue is a great deal, however, it could go at 1.2 times yearly revenue -

also the smaller hosts go for more money because there is always somebody who will over bid without any clue -
your goal is to get the accounts, at the best deal you can, with what you can afford!
__________________
REBEL NETWORKS
Geek Powered Hosting - The Cloud Made Simple
SuperHero 24 |7 | 365 Support
Please Visit us @ www.rebelnetworks.com
 
 
 


Old
  Post #5 (permalink)   10-17-2007, 08:51 AM
HD Master
 
bobchrist's Avatar
 
Join Date: Jan 2007
Posts: 484

Status: bobchrist is offline
You can evaluate the cost checking their track record of profit & loss account, customer base and future profit making ability.
__________________
Raid-x
 
 
 


Old
  Post #6 (permalink)   01-06-2008, 07:13 PM
HD Amateur
 
Join Date: Jun 2006
Location: Chicago
Posts: 86
Send a message via ICQ to redhotservers Send a message via AIM to redhotservers Send a message via MSN to redhotservers

Status: redhotservers is offline
Quote:
Originally Posted by 1maverick View Post
here is the main problem, and take it from a company that has purchased 5 hosting companies in 4 years.
Can you advise on how you purchase the business and move all the accounts?

How do you trust the other company?
__________________
Unmetered Chicago Dedicated Servers | Web Hosting
Business Services
Email: sales@redhotservers.com
█Cpanel - Direct Admin - Plesk - Windows server and more
 
 
 


Old
  Post #7 (permalink)   01-29-2008, 03:24 PM
HD Newbie
 
Join Date: Dec 2007
Location: Tampa, FL
Posts: 27

Status: HostingAmerica is offline
Redhot: you do not trust the other company. Write a contract and have legal council advise on it.

Regarding valuation: six months collected revenue is an oft-used valuation tool in the hosting world. Regarding infrastructure purchases, figure in depreciation over three years for servers and you should be all square.
__________________
HostingAmerica.com
Declare Independence from Middlemen!
Virtuozzo VPS and Dedicated Server Sales
813-342-2100
 
 
 
Reply

Thread Tools

New Post New Post   Old Post Old Post
Posting Rules:
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
vB code is On
Smilies are On
[IMG] code is Off
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On
Sponsored By: