25 Linux Clients, each uses less than 200 MB, and not much bandwidth at all. None of them use databases or anything too complex.

I was told there are 25 of them. Most pay approximately $20-30 per month (but paid quarterly).

I was also told that GROSS income is about $5,000 per year, however, that is before paying the server fees :-( I would buy a server and transfer them to my own rackshack server.

Tell me what I should offer for these clients.

No more than 1.0x to 1.25x annual revenue.

Also make sure those clients are monthly pays. if they are quarterly, semi-annual, or yearly then the sell may have pocketed that revenue and you wont see a dime till the clients current plans come up for renewal.

They are asking $2,000 for the clients. They pay quarterly, and they are about to pay very soon (October)! So I'd get paid right away.

Unless it takes longer than October before I have them. In both cases, what do you think?

How does it sound?

$2,000 for a revenue multiple of 0.4x ???? Those numbers don't add up. What is behind the curtain. He must have a hell of a discount for quarterly payments. Maybe that is why he wants out so cheap.

$5,000 annual gross / 25 clients / 12 months = $16.66 per month
He told to $20 to $30 per month.

Find out if all of those clients are actually paying and if so, are they on time. Also, why are his clients on quarterly payments. No monthly payments? Sounds a little odd.

Whatever you do, realize that you won't get all of them!

We took some clients from a company that wanted to get out of the hosting business. Their largest client (~$80/month) didn't transfer to us because his friend gave him free hosting... :rolleyes: Those clients were all legitimate businesses, too, not just people hosting personal sites (including the $80/month client.)

Conversion from another company is a lot of work. I'd say pay 3-5 months worth of revenue, tops, for these customers. $2000 is not unreasonable, but I'd negotiate it down a bit more. Monthly revenue would probably only be about $500 on these clients, and that's if you convert all of them and manage to make them all stay. $1500 is a good deal and I would take them at that price.

Before buying you need a breakdown of the exact package specs each client is on aswell.

I think there are a ton of missing variables.

Despite the owner's claims of what they are using, just exactly how much space/transfer would you be on the hook for with them?
They may not have anything resource intensive now but what are the general nature of the sites?
Exactly how many clients pay quarterly?
When you pay the $2000.00 how much revenue will you be able to collect over the nect 12 months from them if everything remains status quo?
How long have they been with the host you are buying them from?
Do you have any guarantees that host won't re-open his doors after the purchase?

There is a lot to consider here...

I'd ask for proof before you do anything.

Some how, this seems more like a scam.

It could be, that it just hit him, that though his plans for these customers, where eye catching, currently they are not bring in any useful funds in his pocket.

By passing them onto you, when you go belly up on the cost, his hands are clean, but your not going ot be looking so hot.