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  Post #15 (permalink)   01-23-2005, 08:47 PM
HD Addict
Join Date: Jul 2004
Location: Nova Scotia | Canada
Posts: 193

Status: Simon is offline
Originally Posted by Artashes
Are you serious? Has it always been like that or was this number 24 months just a couple of years ago?

Keep in mind, the intro costs for a "takeover company" is pretty much the price you paid for the company, all over again.

Granted, for recognised brands, the client-induced income becomes the nominal, and often unimportant fee, and the brand it's self can bring in three, five, even ten times what the actual client base is worth.

I have been involved directly in thirteen hosting company buy-outs, seven times as the buyer, and six times as either an observer, or as a friendly advisor. The 'rules' I stated above, are unwaivering with each of those as an example.

Another rule: Take your client base direct-income, and take 20% off - whether these be yearly signups, casual signups, or people who just don't like the fact that the company was purchased (even if quality remains/gains).

Here's another rule of thumb: If the company is touted as for sale in public, take another 10, or even 20% off the client based income. You can also almost guarantee, with a public sale, that client signups will drop in numbers, at least for 3-6 months, as people will be wary of 1: why the company was sold - 2: How smooth was the change of guard.

Of course, there will be those who disagree with me, which they are of course welcome to do.

If you can get one years worth of gross income for this sale, my advice would be to take it and run.

EIRCA Internet Solutions - Meeting in the middle.

Last edited by Simon : 01-23-2005 at 08:49 PM.