I am NOT a serious prospective buyer for the web hosting company, but I am just CURIOUS about this web hosting company. I am just looking at an integrated web development company grossing approximately $250,000 per year from 100 business hosting customers. Equipment is included. It is located within two data centers (Texas and New York). It is asking for... $250,000. Do you think this would be a good web hosting company to buy?

My first thought is no.

But can't really make any reasonable remark about it without hiring some advisors who go through their books.

id have to look at

stock value.
debt amount
# of employees
prospectus
revenue yields
and all sorts of that stuff
have a lawyer look into and investigate
take a look at marketing stuff
lots of stuff involved to even see if its a profitable gain or not.

I've moved it to the Running a WH Biz forum - it is somewhat more on-topic in this forum than the Lounge, since you'll have web hosting people who know about this sorta stuff be able to expand properly on what to look for.

As an accountant by trade with experience in mergers and acquisitions, I must add the following comments to the above. Sales volume may indicate potential. However, the key to the value would be the underlying soundness of the business and the business model.

By comparison, you could have two companies such as this. Company A might have utilized sound business practices from day 1 and could easily be earning $75,000 or so per year before owners compensation, interest and taxes. Even $75,000 would only generate just over $50,000 after taxes and would make this a marginal investment. And if the prior owners had to be replaced with new managers the picture worsens. Also, how do the facilities compare to the newer ones being built.

On the other hand, Company B might have built through high advertising expenditures and low pricing. In that case, the business is worth much less, because now it would be very difficult to change the structure to a sound business philosophy.

Also, much like the half full versus half empty glass. Is the profitability improving or sliding.

Even evaluating equipment can be difficult. For instance, investment in servers would have to be significantly discounted due to the rapidity with which technology changes and the quickness of obsolescence.