About 129 accounts. We were presented with a purchase offer to take over another company's hosting business, however the price seems way too high for a small amount of accounts. Annual revenue is only about $26,832 for these accounts. What would you consider a fair price? Some opinions and guesses, and I'll share what the original price given to us was to buy them.

So its a average of $17.77 per account sold to you..... Have you done a background check of that company?

Max I would pay is $13753.98

$6876.99 would be the least amount it would be worth.

i would pay up to half of the annual gross. unless most of there customers are on annual contracts. then less.

$13,416 to be exact. That's half their yearly revenue. Then If my math is correct, you only have $104 per year into each account. $8.67 per month for each account is what it would cost you.

Typically, if you charge $10 per month for a similar account, then you pay at most only $5 for each account bought from another host. That allows you to make $5 gross profit off each account per month. If any of those clients leave, then you minus $5 per month for what's left of the year from the time you bought the accounts over. Personally I would pay no more than what comes out to $2 per month each because unless you offer the exact same things as the previous host, you are liable to have some clients leave, which ups your loss in the deal.

Any downtime due to those accounts being moved or transfered can also up your losses due to clients leaving. Also, 129 accounts isnt very many, so you would have to figure if it is worth it to you or not..

Just to let you guys know, they wanted 60K! I'm sure this will shock you, and we already knew it was too much. Wanted to get some opinions :)

What is that? Almost $500 per account? They are nuts for even thinking about asking for that!

You should expect to pay alot more than these people are telling you... at least 18 months worth of the company income.

-Brendan

I'm curious where the 6 month income figure came from .. no way a company would undersell that much ..

Well, let's ask why a company with only 129 accounts is selling them? Competition? Bankruptcy? Tired of the business? or what??

Why are they selling? If for one of the above reasons, then they would be happy to get the next 6 months income in one lump sum and get out of the biz. Paying $60g for 129 web accounts is like paying $60 to a prostitute for 3 minute sex, it aint gonna happen unless she has amazing fireworks shooting out her ass or something...and even then you can still get burned. That's rediculous.

For far far less revenue spent, you can have 129 accounts sold on your own in a month....it's doesnt cost 60g to do that. You have to figure if it's easier for you do this on your own, or simply buy another out. In this particular case, I think you know the answer to that.....unless, like I said, they have something amazing about their hosting to make it worth that much..

In most cases, the absolute most you would pay is their annual worth, no more...

It is easier for us to do it, we do that every few days, and far less than 60G, however I thought it would be a good topic, and surely shock everyone with what they are asking :)

They are selling because they want to focus on their main business which is online card or merchant services of some type. Not even sure their domain and site with logo/branding even comes with this deal.

If a 129 accounts are worth that much, I'm sure many of us would have crazy net worths :)

I posted much detail on this matter a few months ago, and the info is still valid in today's climate:

http://www.webhostingtalk.com/showthread.php?s=&threadid=16648&highlight=burstnet+AND+revenue

Regards,
Sean R.
BurstNET

Sean, you may want to check on the numbers you have:


Companies with revenues in the <$10.000.00 per month range usually go for 1x yearly revenues.
Companies with revenues in the $25000.00 per month range usually go for 1.5x yearly revenues.
Companies with revenues in the $1000000.00 per year ($one million per year?) range usually go for 2x yearly revenues.
Companies with revenues in the $5000000.00 per month ($5 million per month?) range usually go for 3x yearly revenues.


cheers,
:beer:

I wouldn't sell for less than 1.5 - 2x yearly revenues.

Well One thing i notice is your only listing the clients,
What about hardware, domains, and anything else of any value?

Could be servers, and other hardware with licensed control panels etc etc that could drive up prices considerably..

Just saying :)